We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Amazon (AMZN - Free Report) , the world's leading ecommerce and cloud services provider, is benefiting from strong growth across its business segments, boosting analysts’ expectations for the stock and giving it a Zacks Ranks #1 (Strong Buy) rating.
Notable developments at Amazon include continued growth in Amazon Prime users, a reacceleration of cloud service sales growth as businesses shift their focus from cost-cutting to workload expansion, and huge advances in its burgeoning advertising business.
In addition to the multitude of business progresses at Amazon, the stock is also breaking out from a compelling technical chart pattern. These bullish catalysts make Amazon one of the most appealing stocks in the market today.
Earnings Climb Aggressively Higher
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.
North America revenues (61% of sales) rose 11% YoY, International revenues (22% of sales) increased 10%, and Amazon Web Services revenues (17% of sales) rose 12% YoY.
Amazon is having incredible success with its newer Advertising business, which is suddenly bringing in $10 billion a quarter. The margins for this business are very high and it is growing 22% annually. Even more impressive is that the advertising business is growing rapidly while incumbent advertising businesses like Meta Platforms and Alphabet deal with slowdowns.
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
Technical Setup
Amazon stock has been trading sideways and building out a convincing bull flag over the last 6 weeks. On Monday, the stock broke out above the upper bound of the range, signaling a breakout. So long as the stock doesn’t trade back into the trading range, AMZN should continue higher into the year end.
Image Source: TradingView
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 somewhat confusing earnings multiple, because of the slim margins in 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’s history.
Today, Amazon is trading at a one year forward earnings multiple of 62x which is above the industry average of 33x but is well below its 20-year median of 80x.
Image Source: Zacks Investment Research
Bottom Line
Amazon remains one of the market’s preeminent technology stocks. It continues to dominate both the e-commerce and cloud services industries, which are some of the fastest growing industries in the world and is innovating new businesses such as advertising like it is in start up mode.
Furthermore, it is likely to be a major beneficiary of the Artificial Intelligence revolution. As companies realize the power this new technology offers, they are forced to dramatically increase their computing abilities. Amazon Web Services is going to be a direct recipient of this new demand for processing power.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Bull of the Day: Amazon (AMZN)
Amazon (AMZN - Free Report) , the world's leading ecommerce and cloud services provider, is benefiting from strong growth across its business segments, boosting analysts’ expectations for the stock and giving it a Zacks Ranks #1 (Strong Buy) rating.
Notable developments at Amazon include continued growth in Amazon Prime users, a reacceleration of cloud service sales growth as businesses shift their focus from cost-cutting to workload expansion, and huge advances in its burgeoning advertising business.
In addition to the multitude of business progresses at Amazon, the stock is also breaking out from a compelling technical chart pattern. These bullish catalysts make Amazon one of the most appealing stocks in the market today.
Earnings Climb Aggressively Higher
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.
North America revenues (61% of sales) rose 11% YoY, International revenues (22% of sales) increased 10%, and Amazon Web Services revenues (17% of sales) rose 12% YoY.
Amazon is having incredible success with its newer Advertising business, which is suddenly bringing in $10 billion a quarter. The margins for this business are very high and it is growing 22% annually. Even more impressive is that the advertising business is growing rapidly while incumbent advertising businesses like Meta Platforms and Alphabet deal with slowdowns.
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
Technical Setup
Amazon stock has been trading sideways and building out a convincing bull flag over the last 6 weeks. On Monday, the stock broke out above the upper bound of the range, signaling a breakout. So long as the stock doesn’t trade back into the trading range, AMZN should continue higher into the year end.
Image Source: TradingView
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 somewhat confusing earnings multiple, because of the slim margins in 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’s history.
Today, Amazon is trading at a one year forward earnings multiple of 62x which is above the industry average of 33x but is well below its 20-year median of 80x.
Image Source: Zacks Investment Research
Bottom Line
Amazon remains one of the market’s preeminent technology stocks. It continues to dominate both the e-commerce and cloud services industries, which are some of the fastest growing industries in the world and is innovating new businesses such as advertising like it is in start up mode.
Furthermore, it is likely to be a major beneficiary of the Artificial Intelligence revolution. As companies realize the power this new technology offers, they are forced to dramatically increase their computing abilities. Amazon Web Services is going to be a direct recipient of this new demand for processing power.