- Summary:
- Amazon stock price rose sharply following a forecast-beating earnings call. Despite a strong Capex, I still expect AZMN to stay above $200.
Amazon Stock price rose sharply in the pre-market session on Friday, propelled by upbeat earnings. The stock was up by 6.6 percent at the time of writing, trading at $198. Following the results, analysts at leading institutions revised their price targets for Amazon (NASDAQ: AMZN) upwards, signaling a strong growth outlook.
The company reported revenues of $158.9 billion in the third quarter of the year, above median forecast figure of $157.2 billion. The Earnings Per Share (EPS) came in at $1.43, equivalent to 25.2 percent above analysts’ forecasts of $1.14. A key growth driver for the company was the Amazon Web Services (AWS), which generated $27.5 billion, translating to 19 percent growth year-over-year. Also, advertising revenue came in strong, growing by a similar margin and bringing $14.3 billion.
On the downside, however, the company’s capital expenditure (capex) spiked by 81 percent to $22.62 billion year-over-year, driven by intense investment in the AI front. That is unlikely to slow down, as the company goes head-to-head against tech rivals like Microsoft, Apple, Tesla and Meta. The company says it will spend $75 billion in capex for the full year. Ultimately, such heavy spending could eat into its magins in the coming quarters.
That said, Amazon gave a guidance for revenue growth of between 7 percent to 11 percent for the current quarter, transalting to income of $181.5 billion-$188.5 billion. That could provide fuel for a strong upside in the fourth quarter. Following the upbeat show, RBC Capital markets revised their 12-month target price for apple to $225 from $215, Goldman Sachs raised it by $10 to $240, while Oppenheimer raised it by a similar margin to $230. All three have an “Outperform” rating on the stock.
Amazon stock price analysis
Amazon stock price will likely stay on the upward trajectory if the action is maintained above the 197.60 pivot. That could see initial resistance coming in at 200.20. However, if the buyers extend their control, they could break above that level and test 201.50.
On the other hand, moving below 197.60 will favour the sellers to be in control. In that case, the first support is likely to be at 195.62. However, if they extend that control, the momentum could break below that support and invalidate the upside narrative. Also, the price could go lower to test 194.35.
