Amazon (AMZN) experienced a significant surge in its stock price on April 8, marking a notable milestone as its market capitalization edged closer to the $2 trillion mark. This surge occurred just ahead of the company’s highly anticipated first-quarter earnings report scheduled later in the month.
Throughout the year, Amazon shares have seen remarkable growth, contributing to an increase in its market value of over $370 billion. Among the top-performing tech stocks known as the Magnificent 7, Amazon stands out, trailing behind only Meta Platforms (META) and Nvidia (NVDA) in terms of market value appreciation.
Investor enthusiasm for Amazon’s prospects stems from its diverse portfolio of business segments, which includes online retail, web services, streaming media, and advertising sales. As the world’s largest online retailer, Amazon enjoys a dominant position in the market.
Despite concerns about potential margin pressures due to substantial capital expenditures required to maintain competitiveness, Amazon has begun to see the benefits of a renewed focus on cost-cutting measures. Over the past year, the company has implemented significant job cuts and strategic overhauls across various divisions, while simultaneously ramping up investments in AI technologies to enhance operational efficiency.
Brian Olsavsky, Amazon’s chief financial officer, indicated earlier in the year that the company is adopting a more disciplined approach to managing headcount following a period of aggressive hiring.
In addition to cost-cutting efforts, Amazon’s cloud-computing division, Amazon Web Services (AWS), is poised to benefit from increased investments in artificial intelligence (AI). As businesses demand more sophisticated data storage and management solutions, AWS is well-positioned to capitalize on this trend. Amazon has also introduced AI initiatives such as the Chatbot “Q” and is developing new AI chips to enhance its server capabilities.
With signs of improvement in profitability and traffic in its core retail business, Amazon remains optimistic about its first-quarter revenue, with forecasts suggesting it could reach up to $143.5 billion.
Given these positive developments, Morgan Stanley analyst Brian Nowak reiterated Amazon as the bank’s Top Pick, citing its “multiyear, efficiency-based cash-flow story” and raising the price target to $215 per share. Nowak believes that Amazon’s “cost to serve” model, coupled with regional supply chain optimization, could lead to earnings of $100 billion by 2026.
Looking ahead, Wall Street analysts anticipate Amazon to report first-quarter earnings of 83 cents per share on revenue of approximately $142 billion. Revenue from AWS is expected to rise by around 15% year-over-year to $24.53 billion, while online sales and ad sales are projected to increase by 6.6% and 23%, respectively.
As of recent trading, Amazon shares were up 1.07% at $187.04 each, continuing the stock’s impressive year-to-date gain of around 25%.