Amazon stock price forecast: Can it break above $200?

By:
on Jun 14, 2024
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  • Amazon showcases strong growth in core businesses.
  • Significant investments in AI and market expansion ongoing.
  • Stiff resistance at $190, potential rally to $200 if crossed.

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In recent years, Amazon.com Inc (NASDAQ: AMZN) has emerged as a powerhouse not only in e-commerce but also in cloud computing and artificial intelligence sectors. With a relentless focus on innovation and expansion, Amazon’s business fundamentals have continued to strengthen, reflected in its financial performance and strategic maneuvers.

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Robust growth in core businesses

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Amazon’s first-quarter results showcased robust performance across its core segments. AWS, in particular, demonstrated resilience, with operating income soaring to $9.4 billion, up from $5.1 billion the previous year.

Despite speculation about dividend payouts, Amazon remains committed to its growth-oriented strategy, prioritizing investments in business expansion and innovation. The company’s robust financial position, highlighted by substantial cash reserves and manageable debt levels, provides a solid foundation for future growth initiatives.

Analysts believe that AWS has overcome past headwinds, with demand surging and operating income margins improving significantly. This optimism is echoed by projections from J.P. Morgan and Morgan Stanley, both of which have raised their price targets on the stock to $240 and $220 respectively, citing AWS’s strong growth prospects.

Strategic investment in AI and expansion

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Amazon’s strategic focus on generative artificial intelligence (AI) is poised to become a multi-billion-dollar business, with significant investments in cloud computing and AI technology. CEO Andy Jassy has highlighted strong demand signals for AWS services, particularly in generative AI, underlining the immense growth potential in cloud-based AI solutions.

Additionally, Amazon’s expansion efforts, including infrastructure investments and international market penetration, indicate a commitment to long-term growth and market dominance.

 Leadership transition at AWS

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Amazon Web Services (AWS) recently announced a leadership change, with CEO Adam Selipsky stepping down and Matt Garman taking the reins. Despite the transition, analysts at Citi Research anticipate a smooth shift, buoyed by AWS’s reaccelerating revenue and growing demand for services like workload migrations and Generative AI.

Citi reiterated its Buy rating on Amazon with a price target of $245, reflecting confidence in the company’s trajectory under new AWS leadership.

As Amazon continues to capitalize on emerging technologies and expand its market presence, invest. Despite the stock’s recent retracements from all-time highs, fundamental indicators suggest a resilient and growth-oriented business outlook for Amazon.

Now, let’s delve into the charts to analyze the stock’s price movements and potential trends, providing insights for investors seeking to capitalize on Amazon’s market performance.

Stiff resistance above $190

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Amazon’s stock went into a freefall a few weeks after Jeff Bezos handed over the CEO’s role to Andrew R. Jassy in July 2021 which saw it crashing from around $190 to close to $80. However, the stock made a strong recovery since the start of 2023 culminating in its recent all-time high at $191.70.

AMZN chart by TradingView

Despite this recent recovery, the stock is again facing resistance at $190 which is not a good sign. In its previous run up to $190 levels, the RSI indicator had ventured into the overbought territory which it hasn’t so far in the present rally resulting in a negative divergence, which again doesn’t bode well for the stock.

Investors who are bullish on the stock and want to see it cross above $200, must wait for it to give a closing above $190 for at least two consecutive days. If the stock manages to do that, then we can see it rallying above $200 in the coming weeks.

Traders who are bearish on the stock have a low-risk entry here. They can short the stock near $183 with a stop loss at $193.5. If the short-term bearish momentum intensifies, the stock can take support near its 38.2% Fibonacci retracement from the previous swing low to the current high near $149.5 where one can book profits.

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