Amazon (AMZN) has received a tariff reprieve, but the question remains whether Amazon stock is rounding back into shape. The tech giant’s shares have risen 11.5% in May following declines of 10% in March and 3% in April. Despite investor optimism about Amazon’s AI potential and e-commerce profitability gains at the start of the year, Amazon stock is down 6.3% overall in 2023 as of Thursday’s close.
Analysts are closely monitoring the position of Amazon Web Services (AWS) in the battle for enterprise artificial intelligence spending against Microsoft (MSFT). Meanwhile, Walmart (WMT) is challenging Amazon’s significant lead in U.S. e-commerce. The primary concerns for Amazon stock focus on how tariffs could impact the company’s vast digital storefront. Amazon’s stock plummeted after President Donald Trump announced his broad tariff plan on April 2, but Trump has since paused or lowered most of those levies.
Recent Stock Action and News
Amazon stock rose 8% on May 12 when tariffs on Chinese goods were reduced from 145% to 30% due to a temporary U.S.-China trade agreement. The stock’s recent movements have been influenced by a series of tariff changes and updates. After falling the previous Friday following Trump’s threat of a 50% tariff on European goods, Amazon shares rebounded 2.5% on Tuesday when Trump announced a delay in EU tariffs until July. The stock also gained on news that a federal court blocked Trump’s use of emergency powers to impose tariffs, although this ruling was quickly stayed by an appeals court.
Technical Analysis
Amazon stock has moved back above its 21-day, 50-day, and 200-day moving averages this month. The stock is currently in a cup-with-handle base with a buy point of 214.84, according to the IBD MarketSurge pattern recognition tool. Amazon’s Relative Strength Rating stands at 74 out of 99, indicating it has outperformed 74% of stocks in the IBD database over the past 12 months. The IBD Composite Rating for Amazon stock is 93 out of 99, combining five proprietary ratings.
Earnings Report and Analyst Views
Amazon’s Q1 earnings beat expectations, with earnings increasing 62% year-over-year to $1.59 per share and sales growing 9% to $155.2 billion. However, guidance for Q2 disappointed investors, with projected operating income below analyst expectations. Analysts remain bullish on Amazon stock, with 96% of the 72 analysts following the stock having a buy rating, according to FactSet. The average target price is $237.79, implying about 16% upside from recent prices.
Conclusion
Despite struggles this year, Amazon’s leadership in e-commerce and cloud computing, along with its growing advertising business, maintains investor interest. The company’s push for custom AI computing chips continues to be an important bet for its future growth.
