Stock of the Week: Amazon - Long-Term Opportunity?
Has the valuation become compelling at this level?
Here is the 15th edition of Stock of the Week. You can find all the previous analyses and my articles on my main page (for an easier search, use a computer, mobile version is harder to navigate).
Here are the links to the 3 previous “Stocks of the Week” as well
This week, we are focusing on Amazon. The e-commerce and cloud giant recently published and reached interesting support levels. Is it a good time to buy? Let’s find out!
Would you consider investing in Amazon? Share your thoughts in the comments
While free subscribers already benefit from a wealth of valuable content, upgrading to a paid subscription unlocks exclusive research, in-depth insights, real-time portfolio tracking, advanced stock screeners, and more giving you an edge to stay ahead of the market. Don’t miss out: subscribe now and supercharge your investing journey!
One Pager
The stock at a glance!
Recent news
Reports suggest that Amazon could lose $10B in profits due to tariffs (compared to the $68B expected in 2025). Please note that this is a difficult forecast
Amazon recently angered the White House after projects to display the cost associated with custom duties on its website
Amazon made bid to acquire TikTok. Commercial synergies could be interesting even if chances are slim
Amazon heavily invests in AI for different uses like the shopping assistant Rufus or AI models. Amazon will benefit from AI by using it (improving its sales and profitability), creating new business streams and expanding its AWS business
Automation (warhouse, delivery with drones, …) will continue to offer operational improvement to the company
Last earnings report
Amazon reported net sales of $155.7BB, a 9% increase YoY from $143.3B in Q4 2023. The company achieved an EPS of $1.59, surpassing analyst forecasts of $1.37 and up 62% vs Q4 2023.
AWS disappointed with a 17% YoY growth down from 19% in the last quarter. Despite the 62% EPS growth, the investors heavily focused on this news. The company explained that the growth was constrainted by capacities but the comparison with Microsoft’s 33% Azure’s growth in Q1 2025 is the main difficulty as it shows market share loss.
Analysts’ recommendations
May, 02. BofA. Buy. $225 —> $230
May, 02. Baird. Buy. $215 —> $220
May, 02. Deutsche Bank. Buy. $206 —> $210
May, 02. Jefferies. Buy. $240
May, 02. UBS. Buy. $253 —> $249
May, 02. Wolfe. Buy. $200 —> $220
May, 02. Truist Securities. Buy. $230 —> $226
May, 02. Barclays. Buy. $265 —> $240
May, 02. HSBC. Buy. $280 —> $240
May, 02. JP Morgan. Buy. $220 —> $225
My analysis
Amazon stands as one of the most compelling companies in the world today, with the potential to become the first to surpass $1 trillion in annual revenue. Its presence spans across several high-growth, future-proof sectors (e-commerce, logistics, cloud computing, advertising, content, AI, etc)
The company's competitive moat is exceptionally strong, built on scale, customer loyalty, technological infrastructure, and ecosystem lock-in. While macroeconomic risks such as tariffs and potential trade retaliation could introduce short-term headwinds, they are unlikely to derail Amazon's long-term trajectory
A key driver of Amazon’s bullish outlook lies in its steadily improving margins (from 9.3% in 2024 to 12.0% expected in 2025 - before the impact of tariffs). Over the past few years, the company has successfully shifted from a low-margin retail model to one increasingly powered by higher-margin segments like AWS, advertising, and subscription services. This margin expansion is now the primary engine of EPS growth
AWS growth disappointed but growth remains solid and it doesn’t change the dynamism: Microsoft will soon be the market leader.
With over $100B in cash, Amazon is in a prime position to reinvest aggressively across its core and emerging verticals. Whether through acquisitions, R&D, infrastructure, or AI innovation, the company retains enough flexibility to fuel future growth
If you are interested in the company, here is my article about it
Technical analysis
I have defined three buying zones that I find interesting for long-term investments during pullbacks. While these zones may not be reached, I am prepared for a market (or stock) consolidation to seize long-term opportunities. For me, this approach offers a better risk/reward ratio.
Of course, this is just my opinion, and I am sharing it with you, but each investor should decide on their own investment style. With that said, here are my three buying zones for Amazon.
Buying zone 1. $170
Buying zone 2. $150
Buying zone 3. $125
If you enjoyed this article and like Quality Stocks, please give it a like and spread the word!
Used source: Marketscreener.com. Affiliate link just here
Amazon’s operating income increased~3 billion. Income before tax increased ~9 billion. Of that change “other income” accounted for ~5 billion of the change. I think some comment on that and whether it might continue would be in order.