Amazon (AMZN) Shows Promising Signs for Investors: Analysis & Forecast

StockInvest.us, 2 weeks ago

Amazon Technical Analysis

Amazon.com, Inc. (AMZN) closed at $200 on July 02, 2024, up $2.80 or 1.42% from the prior close. The stock's intraday low was $195.93 and a high of $200.43, marking a new 52-week high. The RSI14 is at 67, indicating the stock is nearing overbought territory but not yet signaling a reversal. Key support is identified at $193.25.

The 50-day and 200-day moving averages are set at $184.55 and $162.16, respectively, demonstrating a strong upward trend. The MACD over three months stands at 2.63, suggesting continued bullish momentum. Volume was 1.41 million, significantly below the average volume of 42.20 million, potentially indicating reduced trading activity around the holiday period.

For the next trading day (July 03, 2024), the ATR value of 2.19 suggests a moderate level of volatility. Given the current momentum and technical indicators, a continuation of the uptrend with minor corrections is likely. For the upcoming week, provided there are no significant external shocks, the bullish sentiment is expected to persist with potential minor adjustments due to earnings anticipation on August 01, 2024.

Fundamental Analysis

Amazon Amazon's market cap stands at an imposing $2.08 trillion, reflecting its significant market influence, especially given the recent mentions of AI stocks. The current P/E ratio is 55.72, relatively high but not unexpected for a growing tech giant actively investing in innovation.

Amazon's EPS of 3.58 signals solid earnings performance, although the P/E multiple hints at high investor expectations for future growth. The discounted cash flow (DCF) analysis yields a value of approximately $50.06 per share, suggesting that the market price is significantly higher due to anticipated future growth and existing market position.

Recent news highlights Amazon's strategy and success in capitalizing on the burgeoning AI market, stating that Amazon counts on "grit and innovation" to meet AI surge, positioning itself for continued growth. Additionally, Tony Wang from T. Rowe Price and other analysts have expressed long-term optimism, underlining the company's multifaceted growth strategy, spanning e-commerce, AI, and healthcare sectors. The target price consensus median of $200 aligns closely with the current market price, suggesting balanced market expectations.

Over the long term, Amazon's extensive investments in AI and innovation, coupled with its robust market position, imply sustained growth potential. However, a high P/E ratio warrants careful monitoring of earnings performance amidst elevated market valuations.

Overall Evaluation: Hold

Given strong technical indicators and a high market valuation reflecting future growth prospects, Amazon.com, Inc. (AMZN) is categorized as a 'Hold' candidate. This evaluation is basis on current overbought signals, aligned target median price, and the high P/E ratio. While Amazon demonstrates robust growth potential and solid financial health, caution is advised due to elevated market expectations and potential for volatility in the near term.

Check full Amazon forecast and analysis here.