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1日前
AMZN: A Case Study in Bearish Divergence
By: David Keller | February 24, 2025
In the later stages of a bull market cycle, we will often observe a proliferation of bearish momentum divergences. As prices continue higher, the momentum underneath the advance begins to wane, representing an exhaustion of buyers.
We've identified a series of bearish momentum divergences in the early days of 2025, from Magnificent 7 names like Alphabet (GOOGL) to financial institutions including Synchrony Financial (SYF). Today we'll focus in on the bearish momentum divergence for Amazon.com (AMZN), which could indicate broader signs of weakness for the consumer discretionary sector as well as for the equity markets as a whole.
The daily chart of AMZN features all the key features of a bearish momentum divergence. Note how the price has remained in a primary uptrend going into this week, marked by a clear pattern of higher highs and higher lows. The most recent all-time high, achieved earlier this month when AMZN pushed briefly above the $240 level, saw the RSI fail to get above the overbought threshold.
In a healthy bullish trend, we would expect higher price highs to be supported by strong momentum readings, indicating an influx of buying power and investor optimism. When new highs are matched with lower RSI levels, that suggests a lack of buying power and evaporating investor optimism.
Once a bearish momentum divergence is confirmed, we can monitor the most recent swing low to confirm a potential breakdown as the price follows through after the divergence. After reaching that support level around $215 last Friday, we have seen AMZN push below this support level during the trading day on Monday. A confirmed close below this support level could represent a meaningful breakdown and a "change of character" for one of the top weights in the Consumer Discretionary Select Sector SPDR Fund (XLY).
Any time I see a potential pattern on the daily chart, I remember the classic market maxim, "When in doubt, zoom out!" The weekly chart shows how the most significant pullbacks in 2023-2024 were marked by a sell signal from the weekly PPO indicator.
Over the last two weeks, we've recognized a similar bearish pattern to those previous pullbacks, both of which ended with AMZN finding support at the 40-week moving average. That would align closely with the 200-day moving average on the daily chart, which currently sits just below the $200 level.
When I see a bearish momentum divergence appear on a chart like Amazon, I've learned to put that chart on a ChartList of potential reversal names, and monitor those tickers for signs of a breakdown of support. Based on our analysis of the daily and weekly charts of AMZN, this leading internet retailer could be signaling a key breakdown going into March.
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2週前
Amazon Issues Weak Q1 Sales Guidance: To Buy or Not to Buy the Stock?
By: Zacks Investment Research | February 12, 2025
Amazon AMZN delivered impressive fourth-quarter results that exceeded analyst expectations, with revenues growing 10% year over year to $187.8 billion and operating income surging 61% to $21.2 billion. However, the stock declined in after-hours trading as investors focused on management's conservative first-quarter 2025 outlook, which highlighted potential headwinds to growth in the coming months.
AMZN’s Q1 2025 Guidance Raises Some Concerns
The e-commerce and cloud computing giant projects first-quarter 2025 revenues between $151 billion and $155.5 billion, representing growth of 5-9% compared with first-quarter 2024. This guidance incorporates an unusually large foreign exchange headwind of approximately $2.1 billion, or 150 basis points. Additionally, the company noted that first-quarter 2024 benefited from an extra day due to the leap year, which contributed approximately $1.5 billion in net sales. These factors suggest a potential slowdown in underlying growth momentum heading into the new year.
The Zacks Consensus Estimate for first-quarter 2025 net sales is pegged at $154.86 billion, indicating growth of 8.06% from the prior-year quarter’s reported figure. The Zacks Consensus Estimate for first-quarter 2025 earnings is pegged at $1.38 per share, which indicates a growth of 22.12% from the year-ago quarter. The figure has moved south by 3.5% over the past 30 days.
Segment Performance Shows Mixed Signals
Amazon Web Services ("AWS"), AMZN's cloud computing division, posted revenues of $28.8 billion in the fourth quarter, growing 19% year over year. While this marks a sequential improvement in growth rate, some analysts question whether this pace can be maintained given ongoing competitive pressures and customer optimization efforts. The segment's operating margin of 36.9% in fourth-quarter 2024, showed a slight sequential decline from the third quarter’s 38.1%. CEO Andy Jassy noted that supply chain constraints, including chip availability and power infrastructure limitations, could impact AWS growth in the near term.
The North America segment demonstrated solid performance with 10% revenue growth and an impressive 43% increase in operating income to $9.3 billion. International operations turned profitable with $1.3 billion in operating income against a loss in the year-ago quarter, suggesting improved operational efficiency across global markets. The company's advertising business continued its strong momentum, growing 18% year over year to $17.3 billion in quarterly revenues.
Valuation and Competitive Landscape
Trading at a forward 12-month Price-to-Sales (P/S) ratio of 3.44X, Amazon's valuation appears stretched compared to the Zacks Internet - Commerce industry average of 1.91X. While this premium reflects Amazon's market leadership and diverse revenue streams, it also raises the bar for future performance.
AMZN’s P/S F12M Ratio Depicts Stretched Valuation
In the cloud computing space, Microsoft MSFT Azure and Alphabet GOOGL-owned Google Cloud continue to gain market share, with Microsoft reporting 30% growth in its cloud business last quarter. Google Cloud's 26% growth also outpaced AWS' 19% expansion, suggesting intensifying competition in this crucial segment. Additionally, both competitors are making significant investments in AI infrastructure and capabilities, potentially challenging AWS' leadership position in enterprise cloud services.
Investment Considerations for 2025
Amazon's capital investments reached $26.3 billion in the fourth quarter, with management indicating this run rate will be "reasonably representative" of 2025 spending levels. The majority of this spending will support technology infrastructure, particularly for AWS and AI initiatives, including the development of custom chips like Trainium 2. While these investments position the company for long-term growth, they may pressure free cash flow and margins in the near term.
The company's focus on operational efficiency continues to yield results, with operating margins expanding across all segments. Amazon has rallied 38% in the past year, outperforming the Zacks Retail-Wholesale sector’s growth of 32.4%, on the back of exceptional business execution and groundbreaking AI innovations. The company’s strategic expansion of its Amazon Bedrock platform positions the tech giant as a frontrunner in the enterprise AI race.
1-Year Performance
However, management highlighted several risk factors for 2025, including foreign exchange volatility, uncertain global economic conditions, and potential changes in customer spending patterns. The planned heavy investment in AI infrastructure and data center capacity also introduces execution risk.
Investment Recommendation: Hold/Wait for Better Entry
While Amazon's long-term growth prospects remain attractive, given its leadership in e-commerce and cloud computing, along with emerging AI capabilities, current valuations and near-term headwinds suggest investors might benefit from waiting for a better entry point in 2025. The company's substantial capital expenditure plans, while necessary for future growth, could limit near-term stock appreciation. Additionally, the conservative first-quarter outlook and forex headwinds may create better buying opportunities later in the year.
Existing shareholders should consider holding their positions given Amazon's strong market position and continued operational improvements. The company's focus on efficiency, expanding margins and strategic investments in growth areas like AI and same-day delivery infrastructure demonstrate sound long-term planning. However, new investors might want to wait for either a pullback in share price or clearer evidence of accelerating growth before establishing positions.
Critical factors to monitor include AWS growth trajectory and margin trends, the success of AI initiatives (particularly custom chip adoption), the impact of global economic conditions on consumer spending, progress in operational efficiency initiatives, and foreign exchange movements. The company's ability to maintain its margin expansion while funding significant growth investments will be particularly important to watch.
Conclusion
While Amazon remains a compelling long-term investment given its market leadership and strategic initiatives, current market conditions, premium valuation and guidance suggest patience may be rewarded with better buying opportunities ahead. Investors should closely monitor quarterly results and management commentary throughout 2025 to identify more favorable entry points as the year progresses. AMZN currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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3週前
Amazon reports better Q4 results, but soft revenue guidance weighs on stock
By: Investing.com | February 6, 2025
Amazon.com stock fell sharply after-hours Thursday after the Internet giant reported softer revenue guidance for the current quarter, offsetting fourth-quarter results that beat analysts' forecasts as the tech giant's cloud growth met expectations and growth in North America improved.
Amazon.com Inc (NASDAQ:AMZN) fell more than 5% in after-hours trading following the report.
For the three months ended Dec. 31, Amazon.com announced earnings per share of $1.86 on revenue of $187.8 billion. Analysts polled by Investing.com anticipated EPS of $1.47 on revenue of $187.33 billion.
“The holiday shopping season was the most successful yet for Amazon and we appreciate the support of our customers, selling partners, and employees who helped make it so,” said Andy Jassy, President and CEO, Amazon.
Amazon's North American business, which drives the bulk of growth, saw revenue climb 10% to $115.6B year-over-year in Q4 and margins jumped 8%, which some on Wall Street flagged as big reason for the bull case on the company.
Amazon had 8% EBIT margins in its North America segment, up from 5.9% in the prior quarter, which RBC said is a "continued proof point on the bull case and how global retail business can ramp with the help of higher margin 3p [third-party] services and advertising."
Amazon Web Services, its fast-growing cloud revenue segment, grew 19% to $28.8 billion in-line with analyst expectations.
For Q1, sales are expected to be $151 to $155.5 billion, missing estimates of $158.33B. The softer guidance comes as the company wrestles with a stronger dollar, forecasting a $2.1 billion drag on revenue.
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3週前
Buy Amazon Ahead of Earnings Today on Strong EPS Estimate Revisions
By: Zacks Investment Research | February 6, 2025
Global e-commerce giant Amazon.com Inc. (AMZN) is set to report fourth-quarter 2024 earnings results on Feb. 6, 2025, after the closing bell. The stock currently carries a Zacks Rank #2 (Buy) and has an Earnings ESP of +4.78%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 (Hold) or better (Rank #1 or 2) and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Factors to Consider
Amazon is gaining on solid Prime momentum owing to ultrafast delivery services and a strong content portfolio. Strengthening relationship with third-party sellers is a positive. The growing adoption of the AWS services portfolio is aiding AMZN’s cloud dominance. A robust advertising business is also contributing well. Amazon’s strong global presence remains a key growth driver.
Deepening focus on generative AI is a major plus. AMZN’s AWS is the largest cloud service provider beating Microsoft Corp.’s (MSFT) Azure and Alphabet Inc.’s (GOOGL) cloud services. AMZN reported record business in the 2024-25 holiday season in terms of both sales and items sold.
Also, the improving AI-powered Alexa business, along with robust smart home product offerings, is acting as a tailwind. Growing capabilities in grocery, pharmacy, healthcare and autonomous driving are the other positives. We expect 2024 net sales to increase 10.7% from 2023.
The chart below shows the price performance of AMZN compared with other “Magnificent 7” stocks in the past month.
Image Source: Zacks Investment Research
Robust Earnings Estimate Revisions for AMZN Stock
For fourth-quarter 2024, the Zacks Consensus Estimate currently shows revenues of $187.28 billion, suggesting an improvement of 10.2% year over year and earnings per share (EPS) of $1.52, indicating an increase of 50.5% year over year.
The Zacks Consensus Estimate for fourth-quarter 2024 earnings has improved 1.3% over the last 30 days. AMZN reported positive earnings surprises in the last four reported quarters with an average beat of 25.9%.
At present, the Zacks Consensus Estimate indicates a year-over-year increase of 10.9% and 79.3%, respectively, for revenues and EPS in 2024. The Zacks Consensus Estimate for 2024 earnings has improved 0.2% over the last 30 days.
Even after this upward revision, the current Zacks Consensus Estimate for 2025 revenues and EPS reflects an upside of 10.8% and 20.1%, respectively. The Zacks Consensus Estimate for 2025 earnings has improved 0.3% over the last 30 days. AMZN currently has a long-term (3-5 years) EPS growth rate of 28.2%, well above the S&P 500’s long-term EPS growth rate of 12.4%.
Image Source: Zacks Investment Research
Solid Short-Term Price Upside Potential for AMZN Shares
AMZN has a return on equity of 22.41% compared with -4.62% of the industry and 16.88% of the S&P 500 Index. The short-term average price target of brokerage firms for the stock represents an increase of 6.1% from the last closing price of $236.17. The brokerage target price is currently in the range of $212-$306. This indicates a maximum upside of 29.5% and a maximum downside of 10.2%.
Image Source: Zacks Investment Research
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1月前
AWS and Booz Allen Announce Expanded Partnership to Speed Digital Transformation for U.S. Federal Agencies
January 24 2025 - 6:45AM
Business Wire
Amazon Web Services (AWS), an Amazon.com, Inc. company (NASDAQ: AMZN), and Booz Allen Hamilton (NYSE: BAH) today announced an expanded partnership and strategic collaboration agreement to accelerate and improve technology outcomes and efficiencies for the U.S. government. Working together, the companies will develop and market solutions to help federal agencies drive innovation, speed decision-making, reduce costs, and scale advanced technologies across intelligence, defense, civil, and commercial missions.
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1月前
Amazon Forecast – Major Stocks Look to Move Higher in Premarket
By: Christopher Lewis | January 14, 2025
• AMZN Technical Analysis
Amazon is slightly higher in pre-market trading, but it’s probably worth noting that Amazon is still basically at the bottom of a consolidation range. It really hasn’t taken the brunt of the selling pressure like some other stocks may have. You could make an argument for $215 being an area that you have to watch, due to the previous swing high, the 50-day EMA, and the fact that it has, at least so far, offered a little bit of support, maybe based on market memory, who knows?
But at this point in time, it does look like it’s going to jump a little bit at the open, not much, but then again, it didn’t sell off like some of the other big names that we follow here. The uptrend is still very much intact when it comes to Amazon.
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2月前
Amazon.com (AMZN) Expands Digital Advertising Offerings
By: Schaeffer's Investment Research | January 9, 2025
• AMZN finished nine of the past 10 years higher
• The stock is starting 2025 near all-time highs
Amazon.com Inc (NASDAQ:AMZN) continues to revolutionize the digital advertising space with its new Amazon Retail Ad Service, allowing U.S. retailers to integrate its ad technology directly onto their websites. More specifically, the service enables brands to place "contextually relevant ads" on search results and product pages.
Shares of the tech behemoth have shown resilience despite broader market volatility. AMZN finished 2024 with a 44.4% gain, marking its ninth positive year in the last decade. The equity is off to a decent start in 2025, hovering just below its Dec. 16, all-time high of $233 with support at the $220 level.
Despite this strong performance, short-term options traders still favor puts. This is per Amazon.com stock's Schaeffer's put/call open interest ratio (SOIR) of 0.85, which sits higher than 74% of readings from the past year. An unwinding of this pessimism could provide additional tailwinds for AMZN.
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2月前
Bull of the Day: Amazon (AMZN)
By: Zacks Investment Research | January 10, 2025
Amazon (AMZN) has ripped 20% higher in the past three months to finally break out meaningfully above its 2021 highs, outpacing most of its Magnificent 7 technology peers during this stretch.
AMZN stock looks ready to run as Wall Street rewards Amazon for its transition into a mature company churning out massive earnings growth. The cloud computing and e-commerce titan is spending heavily to ensure it grabs its share of the gigantic and rapidly expanding artificial intelligence pie. Amazon is even trying to compete against Nvidia in the AI chip market.
Amazon stock trades at all-time highs while its valuation levels are near their lowest on record, driven by soaring earnings.
Investors should consider buying this Magnificent 7 tech stock in January because Amazon looks dirt cheap and ready to take off again following an underwhelming several years based on its lofty standards.
Why Amazon is a Must-Buy Stock in 2025
Amazon holds nearly 40% of the total e-commerce market share in the U.S., blowing away second-place Walmart’s 7%. Amazon also runs the world’s largest cloud-computing business. AWS controls 31% of the global cloud infrastructure market at 31%, outpacing Microsoft’s (MSFT) 20% and Alphabet’s 12%.
Amazon’s Prime business is expanding its reach in the streaming world to better compete against Netflix and others. On top of that, Amazon’s digital advertising segment is surging. The strength of its higher-margin AWS and ad segments and its commitment to efficiency are driving Amazon’s earnings growth.
Image Source: Zacks Investment Research
Amazon grew its revenue by roughly $200 billion ($188b) between FY20 and FY23 to pull in a mind-blowing $574.79 billion in 2023.
On top of that, AMZN swung from a loss of -$0.27 a share in 2022 to +$2.90 a share in 2023, restarting its impressive bottom-line expansion of the last several years after its FY22 downturn.
Amazon’s FY24 earnings outlook has climbed 50% in the last 12 months, with its FY25 outlook over 30% higher. Amazon’s EPS per share estimates have surged recently and its Most Accurate Zacks estimates came in solidly above consensus, helping AMZN land a Zacks Rank #1 (Strong Buy).
The tech powerhouse has crushed our bottom line estimates by an average of 25% in the trailing four quarters.
Image Source: Zacks Investment Research
Amazon is projected to grow its earnings by 82% in 2024 and 20% in FY25 to reach $6.32 a share. The company is also expected to boost its sales by 11% in FY24 and 2025 to climb to $706.50 billion in 2025—adding $130 billion vs. FY23.
AMZN is set to post four straight years of low double-digit sales growth following years of much larger expansion as it settles into its standing as a mature tech powerhouse akin to Microsoft. It is also worth stressing that the larger YoY percentage growth figures are impossible to maintain as the base number rises.
Why Amazon is a Great Artificial Intelligence Stock to Buy
Amazon plans to spend more than $100 billion over the next decade on data centers and other efforts to fuel its AI expansion. Amazon in November said it was investing another $4 billion in AI safety and research upstart Anthropic, doubling its investment.
The additional billions Amazon is pouring into the AI company are projected to help Anthropic improve and speed up the development of its Claude AI assistant. Amazon is ramping up its plans to compete against ChatGPT and other customer-facing AI standouts.
Amazon announced in December plans for what it calls an Ultracluster. The gigantic AI supercomputer will be comprised of hundreds of thousands of Amazon’s own Trainium chips. Amazon’s Trainium chips are purpose built by “AWS for AI training and inference to deliver high performance while reducing costs.”
Image Source: Zacks Investment Research
Tech companies from Apple (AAPL) to Databricks are using AMZN’s newest chips. Amazon is attempting to improve and grow the influence of its in-house-designed chips to compete against Nvidia’s (NVDA) AI GPUs.
According to AMZN, its “Trainium2-based Amazon EC2 Trn2 instances are purpose-built for generative AI and are the most powerful EC2 instances for training and deploying models with hundreds of billions to trillion+ parameters.” Amazon’s new generation of AI chips deliver up to “4x the performance” and have “50% lower training costs than comparable Amazon EC2 instances.”
Now is a Great Time for Traders and Long-Term Investors to Buy Amazon
Amazon stock has climbed around 10,000% in the last 20 years to destroy Tech’s 800%. AMZN has soared 1,400% in the past decade to blow away Apple, Meta, Microsoft, Alphabet, and Tech (344%). Yet, Amazon’s 135% climb in the last five years has AMZN neck-and-neck with Tech.
Image Source: Zacks Investment Research
Amazon is finally starting to break out, surging 20% in the trailing three months vs. Tech’s 6% climb. The recent run pushed Amazon to new all-time highs, breaking out meaningfully above its 2021 peaks for the first time after it briefly climbed above those levels back in July.
Amazon is trading just below its 21-day moving average and near neutral RSI levels.
On the valuation front, Amazon trades over 90% below its highs and at over a 50% discount to its 10-year median at 35.5X forward 12-month earnings. Amazon trades at some of its cheapest forward earnings levels since the 2008 financial crisis. AMZN’s price/earnings-to-growth (PEG) ratio offers 30% value compared to Tech.
Image Source: Zacks Investment Research
Amazon’s ability to help fund a ChatGPT competitor, integrate AI into all areas of its business, and compete directly against Nvidia in the AI chip industry make AMZN one of the top long-term artificial intelligence investments.
Wall Street agrees, with 46 of the 50 brokerage recommendations Zacks has for Amazon sitting at “Strong Buys.”
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