This tech giant's end-of-year rally has just begun

Key Points

• Amazon shares have been rallying hard all month as September's slide continues to be reversed. 
• Several key catalysts are in play, and all are bullish, which should propel shares higher. 
• Investors can expect further gains heading into the end of the year and through the turn into 2024. 

With a 25% rally over the past month sending shares to their highest level in eighteen months, Amazon.com Inc's NASDAQ: AMZN investors have been given an early Christmas present. In many ways, this latest push is just the continuation of the rally that kicked off in January, albeit with a sharp sell-off in July that only ran out of steam four weeks ago. And as we round the corner into the final weeks of trading in 2023, there's every reason to think the current push will go all the way into 2024. 

Brimming with tailwinds

First and foremost, the company's fundamentals are in a great place. The stock is still riding the bump from last month's Q3 earnings report. In that report, expectations for the headline numbers were smashed and with pretty much every cylinder firing, the odds of a gloomier 2024 shrunk considerably.

Indeed, it was concerns of this kind that had pulled shares down through September and October, as equities, in general, softened after seven months of solid upward movement. But just as the S&P 500 index is back on solid footing and within touching distance of its post-Covid highs, so is Amazon. 

Beyond the fundamentals, the stock will likely get fresh momentum from the past weekend, which kicked off the holiday spending season. For e-commerce businesses, the numbers from Black Friday can make or break a holiday season. And while well diversified, Amazon's shares are sensitive to any sign of a slowdown in consumer spending. 

However, with Cyber Monday currently underway, all signs point to a new record being set in terms of spending. It's made all the more impressive by the fact that we're still in an inflationary cycle, notwithstanding the recent readings showing it cooling year over year. All told, Deloitte expects the average consumer to have spent $567 over the holiday weekend, including Cyber Monday. Amazon stands well positioned to have a record couple of days themselves. 

Bullish catalysts

Looking beyond the e-commerce angle and into December, further bullish catalysts from other parts of the business await. Next week Amazon hosts its annual conference, where the company's cloud computing unit is expected to "shine, thanks to a deluge of generative artificial intelligence announcements," according to the investment firm Monness, Crespi, Hardt. 

The team at Monness, who have a Buy rating on Amazon shares, expect bullish remarks and boosted outlooks from the Amazon executives giving keynote addresses. Last year's conference was where OpenAI introduced ChatGPT to the world. It will take a lot for that to be beaten, but we can still expect a few eyebrow-raising announcements. 

Shares can also expect to be buoyed by the news on Friday that Amazon's planned $1.4 billion acquisition of iRobot Corporation NASDAQ: IRBT is set to get unconditional approval from the EU. The anti-trust regulator there had been examining the deal since the summer, and it clears the way for Amazon to add another substantial string to its bow. 

Amazon shares were up another 1% in early trading on Monday, firmly breaking out of what was starting to look like a dangerous triple top. The stock had run out of steam around the $145 mark in August of last year as well as last September, but the rally is now looking stronger than ever. Indeed, last month's dip will probably come to be viewed as a healthy correction that allowed the stock to consolidate its earlier gains from the year and form a fresh base from which to stage the next phase of the rally. 

Let's see if the stock can comfortably leave the $145 level in the rear-view mirror and get up towards the $170 mark. Fresh resistance can be expected around here as this will mean it's within striking distance of all-time highs, but the stock has more than enough tailwinds to take it there in the meantime.