Amazon Hits Record $189.41, Leads Tech Rally with 20% Surge

Key Takeaway

• Amazon's stock hits a record high of $189.41, joining other tech giants in market success, buoyed by strategic cost-cutting and restructuring.
• Shares have surged nearly 20% in 2024, outpacing the S&P 500, with analysts optimistic about AWS's AI demand and retail margin improvements.
• Analysts from Morgan Stanley, Wells Fargo, and Wedbush highlight Amazon's potential for stronger profitability and market opportunities.

Record Valuation Achieved

Amazon.com Inc. has reached a new milestone, joining the ranks of technology giants such as Meta Platforms Inc., Microsoft Corp., and Nvidia Corp. by setting a fresh record in its share price. On Thursday, Amazon's stock rose by as much as 1.9% to $189.41, surpassing its previous intraday high of $188.65 set in July 2021. This achievement marks Amazon as the last of the five biggest US tech firms to hit an all-time high, rebounding from the post-pandemic selloff that saw its shares more than halve due to a cooldown in online shopping demand, rising costs, and a slowdown in growth at its Amazon Web Services (AWS) unit.

Strategic Cost Cutting and Restructuring

In response to the challenges faced, Amazon has embarked on a strategic path to slash costs and restructure its business. These efforts have been aimed at streamlining operations to boost profits and garner shareholder support. Analysts have taken a more positive stance on Amazon's retail business, with Morgan Stanley analyst Brian Nowak highlighting the increasing confidence in the e-commerce giant's ability to deliver stronger profitability and free cash flow in the coming years. Amazon's focus on cost-cutting measures and a renewed emphasis on operational efficiency are anticipated to positively impact its first-quarter earnings, expected at the end of April.

Analysts' Optimism and Market Performance

The company's stock performance has been robust, with shares up nearly 20% so far in 2024, outperforming the S&P 500's 9% ascent. This follows a strong performance in 2023, where the stock advanced just over 80%. Analysts have expressed optimism about Amazon's future, particularly in light of the demand for artificial intelligence (AI) boosting its AWS cloud-computing business and improvements in retail margins following changes to its fulfillment networks. Wells Fargo analysts have named Amazon shares a “high-conviction” pick for the second quarter, citing further retail margin-expansion opportunities. Additionally, Wedbush analysts have pointed to potential benefits from growth in the TV advertising market.

Street Views

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

  "Upside to retail profits is increasing confidence in the e-commerce giant’s ability to deliver stronger profitability and free cash flow in the coming years."

• TD Cowen Analysts led by John Blackledge (Bullish on Amazon):

  "See the company’s cost cutting measures and a new-found focus to boost first-quarter results."