Amazon (AMZN) Shows Bullish Momentum with Overvaluation Concerns, 1 week ago

Amazon Technical Analysis, Inc. (Ticker: AMZN) closed at $199.79 on July 10, 2024, reflecting a minor gain of 0.23% from the previous day's close. The stock's price oscillated between $197.69 and $200.11 during the trading session. Notably, the year-to-date high and low are $201.20 and $118.35, respectively.

Key technical indicators suggest a bullish sentiment in the short term. The 14-day Relative Strength Index (RSI) stands at 72, indicating an overbought condition. The stock is trading above its 50-day ($186.33) and 200-day ($163.38) moving averages, corroborating its strong upward momentum. The Moving Average Convergence Divergence (MACD) is positive at 4.65, signaling continued bullish momentum.

The stock's Average True Range (ATR) is 1.93, suggesting moderate volatility. Support levels are identified at $193.25, with resistance at $200, just below the recent high of $201.20.

Fundamental Analysis

With a market capitalization of $2.08 trillion, Amazon holds a leadership position in e-commerce and cloud computing. Its Earnings Per Share (EPS) is 3.57, yielding a Price-to-Earnings (PE) ratio of 55.96. The forthcoming earnings announcement on August 1, 2024, could provide insights into its revenue and profitability trends.

Recent news positively impacts Amazon's outlook. The launch of AWS App Studio, a generative AI-powered service, underscores Amazon’s innovation in the cloud computing sector. Furthermore, Amazon's new 11-year, $76 billion media deal with the NBA is expected to drive significant long-term revenue, enhancing its media and service segments.

The stock’s consensus target is $187.89, closer to the median target of $200, and far below the high target of $270. Notably, the sentiment among analysts includes 40 'buy' ratings, 3 'hold' ratings, and no 'sell' ratings.

Amazon Short-Term and Long-Term Predictions

For the next trading day, minor fluctuations around the resistance level of $200 can be expected, with potential testing of the $201.20 year high. The trading volume of 32.46 million is below the average volume of 41.97 million, suggesting a watchful market environment.

Over the upcoming week, given the strong technical setup and favorable news, it is reasonable to anticipate the stock maintaining or slightly exceeding its current levels, potentially trading between $197 and $202.

In the long term, Amazon's continual innovation and strategic partnerships, such as the recent NBA deal, position it well for sustained growth. However, the PE ratio of 55.96 implies that much of this growth may already be priced into the stock.

The discounted cash flow (DCF) model suggests an intrinsic value of 51.08, indicating the stock may currently be overvalued, given the market price much higher at $199.79.

Overall Evaluation

Considering the comprehensive technical and fundamental analysis,, Inc. (AMZN) presently exhibits strong upward momentum backed by recent strategic developments. However, the PE ratio and DCF analysis present an indication of potential overvaluation at current levels. Despite this, analyst consensus and strong institutional support make AMZN a 'Hold' candidate, given the fair balance of risk and reward.

Summarily, while short-term investors may see gains, long-term investors should weigh the higher valuation against Amazon's robust growth and strategic prospects.

Check full Amazon forecast and analysis here.