Amazon has finally joined the ranks of $2 trillion tech companies. Amazon stock on Wednesday broke out from a flat base with a more than 3% gain, which followed a price target hike from a Wall Street analyst.
On the stock market today, Amazon stock gained 3.9% to close at 193.61. The price places Amazon's market cap just above $2 trillion.
After a rough 2022, Amazon stock rallied more than 80% last year and entered trading Wednesday up about 24% for 2024. But shares had yet to decisively break out beyond July 2021 highs near 188.
Amazon joins Apple, Microsoft, Nvidia and Google parent company Alphabet as the only companies with $2 trillion-plus market caps.
Bank of America Boosts Amazon Stock Target
Amazon stock's turnaround has been powered by improvement to its retail profitability, steadier growth for its Amazon Web Services business, and excitement about generative AI.
Earlier Wednesday, analysts with Bank of America raised their price target for Amazon stock to 220 from 210. The analysts said they believe Amazon can continue improving the efficiency of its retail operations.
The BofA Securities analysts already rate Amazon as a top pick among large-cap tech companies in 2024.
"Retail has been the big driver of recent estimate revisions (over Amazon Web Services), and with (first quarter) efficiencies exceeding expectations, we think Amazon is on a good path to drive more retail margin leverage upside in 2024," BofA Securities analyst Justin Post wrote Wednesday.
While 2023 was a "banner year" for Amazon's logistics, Post added, "our analysis suggests runway still ahead for efficiency gains."
Amazon Projected To Deliver 9 Billion Packages
Amazon could deliver more than 9 billion package globally this year, according to BofA estimates. That would place its logistics business as the largest U.S. shipper.
A reorganization of Amazon's fulfillment network has helped the company deliver those packages more cheaply and quickly. But Post noted that metrics such as units sold per square foot still lag record levels from 2018 for Amazon.
In BofA's view, there are several efforts underway from Amazon that could further improve retail efficiency. That includes routing more packages through specialized same-day fulfillment sites, utilizing robotics and incentivizing sellers to more evenly distribute inventory across Amazon's logistics network.
Improved efficiencies would allow Amazon to outperform current retail profits, the research note added, helping Amazon stock.
BofA's price target of 220 implies roughly 18% upside from Amazon's closing price on Friday.
Amazon Targets Temu
In other Amazon news, The Information reported that the e-commerce giant is launching a section of its website dedicated to cheap items that ship directly from China. Citing slides shown to Chinese sellers, The Information reported that the service would ship orders in 9 to 11 days to customers, rather than the two-day shipping Amazon is known for.
The strategy would mark Amazon's most direct response to discount seller Temu. Backed by China tech giant PDD Holdings, Temu has quickly grown in the U.S. by selling low cost items from Chinese merchants, with slower shipping times.
Amazon Stock: Flat Base Breakout
With Wednesday's action, Amazon stock has broken out from a flat-base pattern with a 191.70 buy point, according to MarketSurge pattern recognition.
Shares have traded tightly since early April, after Amazon notched its first record close in three years.
