Amazon (AMZN) -) is an e-commerce retail goliath that delivers about 584 million items to consumers annually. Amazon Prime has over 100 million subscribers, its AWS cloud-computing business controls over 40% of the market, and its Whole Foods is the ninth largest grocery store chain in the United States.
The company's ascent since being founded by Jeff Bezos as an online bookseller in 1994 is remarkable. Unsurprisingly, it's grown to become one of the most valuable stocks in the world, rewarding many shareholders along the way.
For instance, this year, Amazon's stock has rewarded investors with an over 60% return. That's impressive, but investors are right to wonder if shares can continue climbing or if we've seen this year's highs.
Here's when Wall Street analyst Stephen Guilfoyle thinks Amazon can be sold.
Amazon still has a lot of room left to grow
As crazy as it sounds, given how many packages Amazon delivers, the company still has plenty of runway to drive revenue and profit growth.
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While Amazon's sales across all its businesses were a jaw-dropping $134 billion in the second quarter, it still trails Walmart (WMT) -), which posted revenue of $162 billion last quarter. Moreover, e-commerce remains a fraction of U.S. and international total retail sales.
In the U.S., e-commerce sales accounted for 15.4% of total sales in the second quarter, according to the Census Department. Global retail sales exceeded $25 trillion in 2022; however, less than $6 trillion was e-commerce, and Amazon's international sales were just $118 billion.
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The company's AWS is the largest cloud service provider, outpacing competitors like Alphabet (GOOGL) -) and Microsoft's (MSFT) -) Azure. In Q2, AWS revenue was $22 billion, an annualized run rate of over $88 billion.
Yet, Amazon CEO Andy Jassy said earlier this year, "About 90% of Global IT spending is still on-premises and yet to migrate to the cloud." Given the flurry of activity surrounding artificial intelligence, it's likely that spending will continue migrating out of silos to hybrid and cloud solutions.
Amazon's grocery business is only scratching the surface, too. While it's a top 10 grocer, Whole Foods market share is only about 1.2%. For perspective, Walmart's grocery market share exceeds 25%.
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While recessionary worry remains, Amazon's financials last quarter were good enough to impress Stephen Guilfoyle, a long-term trader whose career began on the New York Stock Exchange floor in the 1980s.
"[Amazon] crushed top and bottom-line expectations," wrote Guilfoyle recently in a Real Money post. "Guidance for Q3 net revenue was $138 billion and $143 billion, which pulled the mid-point above the $138.3 billion that Wall Street expected. Q3 operating income is expected to post between $5.5 billion and $8.5 billion. The company nearly doubled operating cash flow sequentially and nearly doubled operating cash flow year over year."
The strong quarter isn't the only thing that Guilfoyle likes. He also likes what he sees in the stock's price charts.
"The stock has bounced off of its 50-day SMA (simple moving average) from the upside five times just in August, as Relative Strength and the daily MACD (moving average convergence divergence) appear to be setting up for more bullish positioning,” wrote Guilfoyle.
The 50-day moving average is a crucial line of support and resistance many traders use, while relative strength and MACD are momentum indicators.
Since Amazon is holding above its 50-DMA, and momentum indicators tilt bullish, the company's solid financials could mean the path of least resistance for Amazon's stock is higher.
Guilfoyle believes that shares can be bought by investors as long as they remain above the 50-DMA, and based on technical analysis, his latest price target for Amazon shares is $165, up 20% higher.
Alternatively, traders can sell Amazon if it drops below this trendline support. Guilfoyle's "panic point" is below $133.
