Amazon.com Inc. (AMZN) just gave investors a reason to smile. The e-commerce and cloud giant reported second-quarter results that blew past expectations, sending shares up about 12% in Friday's premarket session. The broader market joined the party too, with Nasdaq futures rising 1.06% and S&P 500 futures gaining 0.47%.
Here's the headline: Amazon posted revenue of $200.61 billion and earnings of $5.75 per share. Wall Street was looking for $196.46 billion and $1.82, respectively. That's not just a beat; it's a statement.
The real star of the show was Amazon Web Services (AWS). The cloud division grew revenue 37% year over year to $42.2 billion, marking its fastest growth in 18 quarters. Management also revealed that its AI and custom chips businesses each surpassed annualized revenue run rates of $25 billion. That's a lot of compute power being sold.
Analyst Sees AWS Breakout
Evercore ISI analyst Mark Mahaney told CNBC that the results delivered the AWS acceleration investors had been waiting for. He called the quarter "the breakout that the stock needed."
Mahaney pointed out that AWS achieved its strongest growth in 18 quarters while operating margin expanded to 39%. That's the sweet spot: revenue growth and profitability improving together. He added that stronger AWS performance could ease investor concerns about Amazon's heavy artificial intelligence spending by demonstrating better returns on those investments.
One potential worry: Amazon's third-quarter revenue guidance looked a bit soft. But Mahaney explained that's mainly because Prime Day shifted into the second quarter, not because consumer demand is weakening. So, no need to panic.
The stock carries a Buy consensus rating with an average analyst price forecast of $321.69. Recent analyst actions include:
- UBS: Buy (Lowers forecast to $305.00) (July 28)
- BMO Capital: Outperform (Raises forecast to $360.00) (July 28)
- Mizuho: Outperform (Lowers forecast to $320.00) (July 28)
Amazon Technical Analysis
Looking at the charts, Amazon remains in a long-term uptrend. The stock trades about 9.9% above its 20-day simple moving average of $242.41 and 13.5% above its 200-day simple moving average of $234.75.
The golden cross formed in May, when the 50-day moving average moved above the 200-day moving average, continues to support the longer-term bullish trend. However, the 20-day moving average remains below the 50-day moving average, indicating near-term price action has been less consistent.
Momentum has cooled slightly. The MACD remains below its signal line and the histogram is negative, suggesting buying momentum has weakened after the recent rally.
- Key resistance: $275, just below the 52-week high of $278.56.
- Key support: $225, an area where buyers previously stepped in during pullbacks.
MarketDash Edge Rankings
Amazon scores strongest on Growth (95.78), reflecting continued expansion across its businesses.
- Growth: Strong (95.78)
- Value: Neutral (59.58)
- Quality: Neutral (52.60)
- Momentum: Weak (23.11)
The rankings suggest Amazon remains fundamentally growth-driven, although momentum indicators have softened after the recent advance.
Amazon ETF Exposure
Amazon is a significant holding in several exchange-traded funds, including:
- iShares Russell Top 200 Value ETF (IWX): 8.32%
- Invesco Nasdaq Internet ETF (PNQI): 9.89%
- Franklin Focused Dynamic Growth ETF (FFOG): 8.55%
Large inflows or outflows in these funds can influence trading activity in Amazon shares.
AMZN Price Action
AMZN Stock Price Activity: Amazon.com shares were up 12.11% at $264.02 during premarket trading on Friday, according to market data.
