After a strong start to 2024, Amazon.com (AMZN) stock slumped for most of July and into August. Shares of the e-commerce giant have formed a consolidation pattern as it tries to rally back to highs from earlier this summer.
↑X Why Amazon Is Expanding Into Everything From AI To Auto See All Videos
Amazon stock fell nearly 9% on Aug. 2, following a mixed second-quarter earnings report. Concerns about the broader economy pushed Amazon shares even lower in the next trading session. But shares have inched up steadily from a low point of 151.61 on Aug. 5.
With a market capitalization of $1.86 trillion as of Aug. 26, the 30-year-old Amazon is still among the world's most valuable companies. But the Seattle-based firm is grappling with concerns about the economy, along with stepped-up competition for digital sales from brick-and-mortar titans Walmart (WMT) and Target (TGT), plus discount-focused upstarts like Temu and Shein.
Meanwhile, the Amazon Web Services, or AWS, cloud business is battling Microsoft (MSFT) to be the leading cloud-platform for generative artificial intelligence. The so-called "Everything Store" operator also is staring down a major antitrust battle with the U.S. government.
So, is Amazon stock a buy? Here's what investors need to know.
Amazon Stock Hovers Near 21-Day Line, Forms Consolidation Pattern
Amazon hit an all-time high of 201.20 on July 8 but fell 24% to a nearly six-month low of 151.61 in intraday trading Aug. 5. Shares fell below Amazon's 21-day, 50-day and 200-day moving averages in that time, offering a sell signal.
But Amazon stock has partially recovered, helped by strong U.S. retail sales data and a bounce back for the broader markets from a July swoon. Amazon stock has gained 16.5% from its Aug. 5 low point as of market open Aug. 26. Shares retook their 200-day level and 21-day moving averages last week, according to MarketSurge. But the stock is still about 4% below its 50-day moving average as of market open Monday.
But Amazon stock is lower in morning trading Aug. 26 and nearing a return to its 21-day line.
With its recent action, Amazon stock has formed a consolidation pattern as identified by MarketSurge charts. As of early Monday, Amazon is 13% below a potential buy point of 201.20 as marked by MarketSurge.
Amazon is still yet to sustain a run beyond highs reached in 2021, unlike big tech peers such as Microsoft, Apple (AAPL) andMeta (META). Profit improvements and excitement about AI powered Amazon stock to 81% gains last year, after shares lost nearly half their value in 2022. Shares of Amazon have notched a couple record highs this year before giving back those gains.
Amazon Stock Slides After Q2 Revenue Miss
Amazon suffered its worst trading day of 2024 following its second-quarter earnings report. Shares fell 8.8% after Amazon reported lower-than-expected sales for the second quarter in an earnings statement published Aug. 1.
The tech giant earned an adjusted $1.26 per share on sales of $148 billion for the June-ended quarter. On average, analysts projected adjusted earnings of $1.03 per share on sales of $148.67 billion, according to FactSet.
On the positive side, AWS sales exceeded expectations with revenue of $26.3 billion, up 18.7% year over year. Analysts were expecting sales growth of 17.6% for AWS prior to the report. Chief Executive Andy Jassy said in a news release that AWS sales are reaccelerating and it remains the top choice for enterprises launching AI-related projects, or moving parts of their operations to the internet cloud.
Investors have spent the past year laser-focused on the revenue growth for AWS. Since the cloud division drives the majority of Amazon's profits, investors fretted as the AWS's rapid growth rate began slowing in 2022. But cloud revenue has now accelerated in back-to-back quarters for Amazon.
But investor's concern is shifting now to the sprawling retail operations. Year-over-year sales growth slowed for Amazon's North America division, from 12% in Q1 to 9% in Q2. The North America division totaled $90 billion in revenue for the quarter, which includes all retail sales, advertising and subscription services revenue in the region.
Amazon also gave lower-than-expected guidance for sales and operating income for the current quarter.
Jassy told analysts that "customers continue to trade down on price when they can." He added that larger purchases, like computers and televisions, are growing "more slowly than we see in a more robust economy."
Amazon Stock: Analysts Remain Bullish
Despite the recent slide and earnings letdown, Wall Street analysts are broadly positive on Amazon stock.
Of the 64 Amazon stock analysts following the company, 95% have a buy rating, according to FactSet.
The average target price for Amazon stock by analysts is 219.83, according to FactSet, implying roughly 24% upside from Amazon's opening price on Aug. 26.
There are some points of debate among analysts, however. Some are concerned that consumers trading down on price will cut into the growth of Amazon's retail margins. Others, however, see Amazon as primed to benefit from reset expectations following the Q2 report.
On Aug. 26, analysts with Wells Fargo reiterated a buy rating but lowered their price target for Amazon stock to 225, from 232. Wells Fargo analyst Ken Gawrelski reportedly lowered estimates to account from heavy upfront costs from the company's Project Kuiper satellite internet business.
Amazon Stock: Technical Analysis
Amazon stock's technical rating tumbled during its July slump but have firmed up in the last week.
The IBD Stock Checkup tool shows Amazon stock with a Relative Strength Rating of 63 out of a best-possible 99, indicating the stock has outperformed 70% of stocks in IBD's database over the past 12 months.
Meanwhile, Amazon stock holds an IBD Composite Rating of 78 out of a best-possible 99. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
But Amazon stock holds an Accumulation/Distribution Rating of D-. That rating analyzes price and volume changes in institutional ownership for a stock over the past 13 weeks. The current rating indicates heavy selling by institutions.
Amazon stock is not in a buy zone and also sits below a key level in its 50-day moving average. Investors also will want to check out IBD's Big Picture column for the current market direction before considering any buy points.
Here is a guide to understanding IBD's rating system.
Will Regulators Take A Bite Out Of Amazon Stock?
One other factor to watch for Amazon: Regulation. Amazon is staring down what is likely the biggest legal fight in its 30-year history. Regulators are challenging Amazon's market power and the company likely will grapple with intense scrutiny in the coming years.
Amazon's regulatory problems came into sharp focus on Sept. 26 when the Federal Trade Commission and 17 state attorneys general filed a major antitrust lawsuit against Amazon.
The FTC accuses the company of using its market power to inflate prices and overcharge merchants. Amazon rejects the allegations, arguing that the FTC is "wrong on the facts and the law, and we look forward to making that case in court," the company said in a statement.
In an Oct. 3 client note, JPMorgan analyst Doug Anmuth said the lawsuit "was very much as expected, and we believe it will be challenging to prove that AMZN illegally maintains monopoly power."
The lawsuit set up a long battle. In February, a federal judge set an October 2026 trial date for the case.
Amazon Market Cap
You can check for Amazon's current stock price here. Amazon's market cap was $1.85 trillion, as of market open Aug. 26. Here is how the stock has grown over time:
| Time Period | AMZN Stock % Gain | S&P 500 % Gain |
|---|---|---|
| 2024* | 15.7 | 18 |
| 2023 | 81 | 24.2 |
| 2022 | -49.6 | -19 |
| 2021 | 2.4 | 27 |
| Since 1997 Amazon IPO* | 194,133 | 570 |
*Prices as of market open Aug. 26
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