4 Reasons Amazon Stock Can't Be Ignored Right Now

Key Points

• Amazon is up nearly 10% off recent lows after a steep post-earnings sell-off.
• Analysts remain bullish, with targets as high as $285, well above record highs.
• Technicals suggest the recovery is gaining strength, supported by rising momentum indicators.

Amazon.com Inc. NASDAQ: AMZN has been quietly but convincingly climbing back into focus. After peaking at an all-time high of $242 in February, shares dropped more than 20%, a move that left many scratching their heads. This company spent the past year consistently overdelivering on earnings expectations, streamlining operations and achieving historic profitability.

Despite the brief drawdown, Amazon closed at $205 on Tuesday night, up nearly 10% from its lows around $190 earlier this month. The stock has begun showing signs of renewed strength, closing near the high of the day in several recent sessions and attracting bullish interest from analysts and long-term investors alike. With earnings due in late April and technicals flashing early signals of a fresh uptrend, it's getting harder to justify ignoring Amazon's upside potential.

1. A Track Record of Outperformance

Its fundamental consistency is one of the most compelling reasons to stay bullish on Amazon. Throughout 2023 and into early 2024, the company beat analyst expectations quarter after quarter, culminating in its most profitable quarter on record at the start of February. Revenue and operating income both came in well above forecasts, with AWS and advertising continuing to grow meaningfully.

Margin improvements have been a recurring theme as Amazon continues to extract more value from its mature segments while investing in high-growth verticals. This blend of operational efficiency and strategic reinvestment has made the company one of the more reliable outperformers in mega-cap tech.

The recent decline in share price felt disconnected from the company's results, which is why many are treating the rebound off the March lows as a correction, not the start of a new downtrend.

2. Analysts Are All-In on the Recovery

Wall Street has not wavered in its support. In the past couple of weeks, several major firms, including Citigroup, Canaccord Genuity Group, and Loop Capital, have reiterated Buy ratings or equivalents on Amazon.

Loop Capital's price target, in particular, stands out at $285. From Tuesday's close of $205, that implies an upside of nearly 40%. But more significantly, it would take Amazon well past its all-time high of $242, set just six weeks ago.

For a $2 trillion company to have this kind of upside priced in by analysts is rare, and it speaks to the underlying strength of Amazon's growth story.

The consensus is that Amazon's long-term value proposition remains intact. Between AWS, a rapidly expanding advertising business and a sticky global Prime user base, analysts see Amazon as well-positioned to weather economic fluctuations and outperform its peers in the process.

3. Technicals Are Flashing Green

From a technical perspective, Amazon looks increasingly appealing right now. The stock's relative strength index (RSI) had dropped to oversold territory during the recent sell-off, but it has since rallied sharply and is now heading very much northbound. This suggests that the worst of the selling may be behind it, and buyers are rushing back in. 

Even more importantly, Amazon's MACD signal recently had its first bullish crossover in months. This momentum shift often precedes further upside, especially when paired with strong closing strength, as we've seen in recent sessions. The fact that Amazon has consistently closed near the highs of the day over multiple sessions suggests that institutional buyers may be getting involved once again. 

4. Valuation Looks Reasonable Again

Following the sell-off, Amazon's valuation has returned to a range that long-term investors should find attractive. Considering the company's record earnings, solid margins and the resilience of its core businesses, the current share price feels like a disconnect from reality.

Amazon now trades with a price-to-earnings ratio that is at its lowest point in years. Its AWS unit is at its most profitable ever, its advertising business has exploded, and it is showing greater operational discipline than ever before.

Meanwhile, its expanding investments in AI, robotics and logistics continue to plant seeds for future growth. The long-term upside case is compelling, especially at a time when many other mega-cap tech stocks are struggling to justify their valuations. The upcoming earnings report in late April will be another test, but if Amazon continues its streak of outperformance, the current entry point may soon look like a bargain.