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This Top Ranked Mega Cap Technology Stock is Breaking Out Now
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Amazon (AMZN - Free Report) , the world's leading ecommerce and web service provider, is benefiting from growth in Prime, AWS, and its newest successful business segment Advertising. This along with strongly upward trending earnings revisions has been lifting its stock price all year.
Amazon stock is up 64% YTD, far outperforming the broad market and its respective industry.
Furthermore, the price action in AMZN is extremely bullish, and it just broke out of a compelling technical chart pattern, confirming Wall Street’s eagerness to own more shares.
For investors looking to add technology exposure to their portfolio, this Zacks Rank #1 (Strong Buy) stock may be the one to buy.
Image Source: TradingView
Stunning Earnings Growth
At its most recent quarterly earnings report, Amazon crushed analysts estimates. Earnings of $0.65 per share were 89.5% above expectations of $0.34 per share, while sales of $134.4 billion surprised to the upside by 2.3% and showed an 11% YoY increase.
Amazon’s culture is about “Obsessing over the customer experience,” and the highlights from its earnings call really cement that belief.
Delivered its largest selection of products to U.S. Prime members at the fastest speeds ever.
Held the biggest Prime Day event ever, with more than 375 million items purchased.
Increased selection in the U.S. Amazon store
Amazon is also having smashing success with its new Advertising business, which is suddenly bringing in $10 billion a quarter. The margins for this business are exceptional and it is growing 22% annually.
Following such stellar quarterly results and strong business momentum, analysts have unanimously upgraded Amazon’s earnings expectations. Current quarter earnings estimates have been revised higher by 49% and are projected to climb 190% YoY to $0.58 per share. FY23 earnings estimates have been lifted by 43% and are forecast to grow 214% YoY to $2.23 per share.
EPS are expected to grow at nearly 34% annually over the next 3-5 years, while sales are expected to grow more than 10% annually over the next two years.
Image Source: Zacks Investment Research
Cloud and AI
Another massive development is the reacceleration of growth in cloud services. Deceleration in cloud sales was a huge topic over the last year, and the other cloud giants Microsoft(MSFT - Free Report) and Alphabet(GOOGL - Free Report) were unable to escape the slowdown as well.
But with the Technology recession now in the past, and tech companies ramping up spending after having to cut back, the segment is again showing how powerful it is. Furthermore, the explosion in AI, which requires tremendous compute power is further adding to the impetus.
It has been shared with me that data scientists across the industry have been bragging to each other about who has the most GPUs, thus allowing them to train more and more data intensive large language models (LLM). For any businesses in cloud computing and date centers this is the ideal sentiment of users.
Amazon also enjoys a commanding lead in the cloud services industry over its competitors Microsoft and Alphabet. At 32% of the total cloud market, it has lost just 2% of its market share over the last year.
Image Source: Statista
Valuation
Amazon has been one of the best performing stocks ever, compounding at 32% annually since its IPO. Additionally, it has always carried a very high, and often misleading earnings multiple, because of the slim margins of e-commerce and huge reinvestment opportunities.
However, now that the company has matured significantly, it is a bit easier to understand the business model, and it now boasts one of the most reasonable earnings multiples in the company history,
Today, Amazon is trading at a one year forward earnings multiple of 60.5x which is above the industry average of 33.5x but is well below its 20-year median of 80x.
Image Source: Zacks Investment Research
Bottom Line
I think Amazon is one of the most compelling investments in the market today. Each of its growing portfolio of businesses is showing incredible strength, analysts continue to raise expectations and the price action cannot hide institutional investors willingness to bid the stock higher.
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This Top Ranked Mega Cap Technology Stock is Breaking Out Now
Amazon (AMZN - Free Report) , the world's leading ecommerce and web service provider, is benefiting from growth in Prime, AWS, and its newest successful business segment Advertising. This along with strongly upward trending earnings revisions has been lifting its stock price all year.
Amazon stock is up 64% YTD, far outperforming the broad market and its respective industry.
Furthermore, the price action in AMZN is extremely bullish, and it just broke out of a compelling technical chart pattern, confirming Wall Street’s eagerness to own more shares.
For investors looking to add technology exposure to their portfolio, this Zacks Rank #1 (Strong Buy) stock may be the one to buy.
Image Source: TradingView
Stunning Earnings Growth
At its most recent quarterly earnings report, Amazon crushed analysts estimates. Earnings of $0.65 per share were 89.5% above expectations of $0.34 per share, while sales of $134.4 billion surprised to the upside by 2.3% and showed an 11% YoY increase.
Amazon’s culture is about “Obsessing over the customer experience,” and the highlights from its earnings call really cement that belief.
Amazon is also having smashing success with its new Advertising business, which is suddenly bringing in $10 billion a quarter. The margins for this business are exceptional and it is growing 22% annually.
Following such stellar quarterly results and strong business momentum, analysts have unanimously upgraded Amazon’s earnings expectations. Current quarter earnings estimates have been revised higher by 49% and are projected to climb 190% YoY to $0.58 per share. FY23 earnings estimates have been lifted by 43% and are forecast to grow 214% YoY to $2.23 per share.
EPS are expected to grow at nearly 34% annually over the next 3-5 years, while sales are expected to grow more than 10% annually over the next two years.
Image Source: Zacks Investment Research
Cloud and AI
Another massive development is the reacceleration of growth in cloud services. Deceleration in cloud sales was a huge topic over the last year, and the other cloud giants Microsoft (MSFT - Free Report) and Alphabet (GOOGL - Free Report) were unable to escape the slowdown as well.
But with the Technology recession now in the past, and tech companies ramping up spending after having to cut back, the segment is again showing how powerful it is. Furthermore, the explosion in AI, which requires tremendous compute power is further adding to the impetus.
It has been shared with me that data scientists across the industry have been bragging to each other about who has the most GPUs, thus allowing them to train more and more data intensive large language models (LLM). For any businesses in cloud computing and date centers this is the ideal sentiment of users.
Amazon also enjoys a commanding lead in the cloud services industry over its competitors Microsoft and Alphabet. At 32% of the total cloud market, it has lost just 2% of its market share over the last year.
Image Source: Statista
Valuation
Amazon has been one of the best performing stocks ever, compounding at 32% annually since its IPO. Additionally, it has always carried a very high, and often misleading earnings multiple, because of the slim margins of e-commerce and huge reinvestment opportunities.
However, now that the company has matured significantly, it is a bit easier to understand the business model, and it now boasts one of the most reasonable earnings multiples in the company history,
Today, Amazon is trading at a one year forward earnings multiple of 60.5x which is above the industry average of 33.5x but is well below its 20-year median of 80x.
Image Source: Zacks Investment Research
Bottom Line
I think Amazon is one of the most compelling investments in the market today. Each of its growing portfolio of businesses is showing incredible strength, analysts continue to raise expectations and the price action cannot hide institutional investors willingness to bid the stock higher.