Amazon's Stock Nears Record High at $187.29 Amid Strong Rebound

Key Takeaway

• Amazon's shares rose 1.2% to $187.29, nearing its record high of $186.57 from July 2021, signaling a strong rebound.
• Morgan Stanley raised Amazon's stock price target to $215, reflecting confidence in its cost-cutting and AWS growth.
• Amazon aims for a record market cap of $1.89 trillion, outperforming the S&P 500 with a nearly 20% increase in stock value in 2024.

Amazon's Stock Performance

Amazon.com Inc. has seen a notable increase in its stock value, with shares rising as much as 1.2% to $187.29 on Monday. This uptick puts the e-commerce and cloud computing giant on the path to surpass its previous closing high of $186.57 set in July 2021. Despite the broader tech sector's rapid growth, Amazon had previously lagged behind peers such as Meta Platforms Inc., Microsoft Corp., and Nvidia Corp., primarily due to a post-pandemic selloff that saw its value drop by about 57%. However, the company has remained a favorite among brokers, with 67 analysts recommending a buy and only two suggesting a hold.

Strategic Shifts and Analyst Optimism

To regain investor confidence, Amazon has embarked on significant cost-cutting and restructuring efforts. These changes, alongside a burgeoning demand for AI, have started to positively impact its bottom line. Amazon Web Services (AWS), the company's cloud unit, has shown signs of re-acceleration in the last quarter, alleviating concerns over a potential slowdown in demand. Morgan Stanley analyst Brian Nowak has expressed increased confidence in Amazon's ability to generate strong Ebit and free cash flow in the coming years, raising the stock's price target from $200 to $215. This adjustment suggests a potential 16% increase from its last close, with the average analyst target sitting at about $209.

Record Valuation and Market Capitalization

Amazon is on track to achieve a record-high market capitalization for the first time since 2021, potentially reaching $1.89 trillion if the stock's gains continue. This would mark a significant milestone, surpassing its previous market value record of $1.88 trillion. The increase in Amazon's split-adjusted share count by 316.1 million, or 3.1%, since its last market-value peak, contributes to this potential record. The company's stock has shown strong performance in 2024, with a nearly 20% increase, outpacing the S&P 500's 9% rise. This growth follows an impressive 80% advance in 2023.

Broader Market Trends and Corporate Developments

The broader market has responded positively to a strong jobs report, with major indices like the S&P 500, Nasdaq 100, and Dow Jones experiencing significant gains. Amazon's stock hit a new high since November 2021 after a 3.4% increase, highlighting the market's sensitivity to corporate and economic developments. Other notable movements include Altice USA's 12% decline following a downgrade by Wells Fargo and Ocugen's 22% surge on positive therapy news. These fluctuations underscore the dynamic nature of the stock market and the impact of both macroeconomic indicators and individual company performances.

Street Views

• Brian Nowak, Morgan Stanley (Bullish on Amazon):

  "That upside to retail profits is giving more confidence in the e-commerce giant’s ability to deliver strong Ebit and free cash flow in the coming years."