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Shares of Amazon.com have made new all-time highs following a banner earnings report.
Despite the strong price appreciation, AMZN stock trades at a discount to the market.
Amazon.com ((AMZN - Free Report) ), the e-commerce and cloud-computing giant, has broken out to new highs following a standout quarterly earnings report that appears to have materially improved the investment case.
AWS growth accelerated sharply, margins expanded and Amazon disclosed that its custom AI chip business has reached a roughly $25 billion annualized revenue run rate. Advertising growth also remained strong, while the company continues to invest aggressively in AI infrastructure.
More importantly, the results provided some of the clearest evidence yet that hyperscaler AI spending can generate substantial returns. That appears to have shifted the broader narrative around AI capex from one centered on cost and free cash flow toward one increasingly focused on monetization and earnings growth.
Wall Street has responded quickly, with earnings estimates revised sharply higher over the past week. Combined with a top Zacks Rank, accelerating price momentum and a valuation that remains compelling relative to Amazon’s history, AMZN currently stands out as one of the most attractive stocks in the Magnificent Seven.
Image Source: Zacks Investment Research
AMZN Estimates Snaps Higher After Earnings Report
Following Amazon’s stellar quarterly results, analysts moved quickly to raise their earnings expectations. Most notably, the Zacks Consensus Estimate for next year has jumped 47.6% to $13.06 per share.
Based on that outlook, AMZN now trades at just 20.8x forward earnings, a compelling valuation given the company’s growth profile and improving profitability.
Sales are expected to increase 15.7% this year and another 14% next year, while EPS are projected to grow 18.7% annually over the long term. With estimates moving sharply higher and the valuation remaining relatively modest, Amazon offers an attractive combination of growth, earnings momentum and multiple expansion potential.
Image Source: Zacks Investment Research
Shares of Amazon on the Verge of Another Breakout
Amazon shares surged nearly 25% in the days following earnings, pushing the stock to new record highs. Since then, AMZN has spent the last several sessions consolidating those gains in a tight bull flag just below the highs.
A decisive breakout above the consolidation, near the $280 level, could signal the start of another leg higher. With earnings estimates rising sharply and fundamental momentum accelerating, the technical setup provides another bullish signal for the stock.
Image Source: TradingView
Should Investors Buy Shares in AMZN?
Amazon currently checks nearly every box investors should be looking for: accelerating growth, sharply rising earnings estimates, a reasonable valuation and strong price momentum.
The setup is somewhat reminiscent of Alphabet in early 2025, when improving fundamentals and a compressed valuation eventually forced investors to re-rate the stock higher. Amazon may now be entering a similar phase.
With AWS accelerating, AI monetization becoming more visible and shares pressing against another breakout level, AMZN stands out as one of the most compelling opportunities in the Magnificent Seven today.
View the Zacks #1 Rank List
Bull of the Day: Amazon.com (AMZN)
Key Takeaways
Amazon.com ((AMZN - Free Report) ), the e-commerce and cloud-computing giant, has broken out to new highs following a standout quarterly earnings report that appears to have materially improved the investment case.
AWS growth accelerated sharply, margins expanded and Amazon disclosed that its custom AI chip business has reached a roughly $25 billion annualized revenue run rate. Advertising growth also remained strong, while the company continues to invest aggressively in AI infrastructure.
More importantly, the results provided some of the clearest evidence yet that hyperscaler AI spending can generate substantial returns. That appears to have shifted the broader narrative around AI capex from one centered on cost and free cash flow toward one increasingly focused on monetization and earnings growth.
Wall Street has responded quickly, with earnings estimates revised sharply higher over the past week. Combined with a top Zacks Rank, accelerating price momentum and a valuation that remains compelling relative to Amazon’s history, AMZN currently stands out as one of the most attractive stocks in the Magnificent Seven.
Image Source: Zacks Investment Research
AMZN Estimates Snaps Higher After Earnings Report
Following Amazon’s stellar quarterly results, analysts moved quickly to raise their earnings expectations. Most notably, the Zacks Consensus Estimate for next year has jumped 47.6% to $13.06 per share.
Based on that outlook, AMZN now trades at just 20.8x forward earnings, a compelling valuation given the company’s growth profile and improving profitability.
Sales are expected to increase 15.7% this year and another 14% next year, while EPS are projected to grow 18.7% annually over the long term. With estimates moving sharply higher and the valuation remaining relatively modest, Amazon offers an attractive combination of growth, earnings momentum and multiple expansion potential.
Image Source: Zacks Investment Research
Shares of Amazon on the Verge of Another Breakout
Amazon shares surged nearly 25% in the days following earnings, pushing the stock to new record highs. Since then, AMZN has spent the last several sessions consolidating those gains in a tight bull flag just below the highs.
A decisive breakout above the consolidation, near the $280 level, could signal the start of another leg higher. With earnings estimates rising sharply and fundamental momentum accelerating, the technical setup provides another bullish signal for the stock.
Image Source: TradingView
Should Investors Buy Shares in AMZN?
Amazon currently checks nearly every box investors should be looking for: accelerating growth, sharply rising earnings estimates, a reasonable valuation and strong price momentum.
The setup is somewhat reminiscent of Alphabet in early 2025, when improving fundamentals and a compressed valuation eventually forced investors to re-rate the stock higher. Amazon may now be entering a similar phase.
With AWS accelerating, AI monetization becoming more visible and shares pressing against another breakout level, AMZN stands out as one of the most compelling opportunities in the Magnificent Seven today.