Can AMZN save the market?

  • Amazon reported strong results after Thursday’s close.
  • AMZN stock surged as a huge beat on EPS was announced.
  • AMZN shares are currently up more than 12% in pre-trade Friday.

Amazon (AMZN) jumps in to the rescue of the stock market this morning after Facebook parent company Meta Platforms (FB) left investors reeling on Wednesday. Amazon announced a big hit on EPS and a small miss on revenue. Investors cheered the news and sent Amazon shares higher in the secondary market Thursday night. This renewed the bullish sentiment. Currently, US futures are also up, with the NASDAQ indicating a 1% higher open for the tech index. We had identified in our overview that Facebook’s pessimism had tilted the risk-reward to the upside for Amazon’s revenue and it turned out.

Amazon Stock News

Earnings per share (EPS) beat big, hitting $5.80 against estimates of $3.67. Revenue, however, fell slightly short, coming in at $137.41 billion from $137.6 billion. In our overview note yesterday, we highlighted strong cloud revenue numbers from IBM and Microsoft. Amazon’s cloud unit, Amazon Web Services, duly performed strongly with sales of $17.78 billion, an increase of more than $1.5 billion from last quarter.

The initial EPS number was a whopping $27.75, which included Rivian’s massive IPO gain. The performance of Amazon Web Services bodes well for future revenue as it is the largest revenue contributor. Yes, the regular activity generates most of the income, but AWS is the most profitable. Amazon also announced a price increase for Amazon Prime. The company hinted at rising costs, as have most companies during this earnings cycle.

Amazon Stock Forecast

The 200-day moving average is the first target in sight at $3,371. Once above there, records are likely. First, Amazon needs to stabilize above the $3,170 double bottom. The Moving Average Convergence Divergence (MACD) has moved into a bullish zone, and the Relative Strength Index (RSI) is finally showing signs of life as it breaks above 50. Support is at $2,670.

AMZN chart, 20 hours

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Karen J. Nelson