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Valuation concerns have culminated in a tech rout on Wall Street, led by AI and chip stocks. Sentiments in the sector have also been hurt by a deep slide in SpaceX (SPCX) following a stellar debut, as the stock is down 22.97% over the past five days.
Investors are also concerned about whether inflation stemming from U.S.-Iran war could lead to higher interest rates, likely making the sky-high surges in tech names unsustainable amid the rapid AI infrastructure buildout. The State Street Technology Select Sector SPDR ETF (XLK) has dropped 1.81% over the past five days. It also dropped 4.14% intraday on June 23.
On the other hand, Amazon.com (AMZN) gained marginally intraday on June 23, as the company gears up for this year’s edition of Amazon Prime Day. The shopping spree event between June 23 and June 26 is expected to be a litmus test of customers' spending power. This is the first time since 2021 that Prime Day falls in the second quarter, after the company shifted it from July to capitalize on demand generated by the FIFA World Cup and the 250th anniversary of U.S. independence.
The earlier timing also gives the company a better chance to utilize the demand from summer travel spending, July 4th stocking, and back-to-school shopping. In fact, analysts at JPMorgan expect this year's Prime Day to generate up to $8 billion in incremental global revenue in the second quarter. Analyst Doug Anmuth and his team think that the event will bring in about 6% year-over-year (YOY) growth in third-party sales and approximately 7% YOY growth in first-party sales.
About Amazon Stock
Headquartered in Seattle, Washington, Amazon is one of the world’s biggest companies, with a vast retail, cloud, logistics, and delivery network. It is also investing heavily in robotics, faster shipping, and AI-driven operations as it continues to expand globally. The company has a massive market capitalization of $2.52 trillion.
Amazon’s stock is up over the past year mainly because AWS reaccelerated, reviving margin and growth expectations, while the market rewarded Amazon’s large AI infrastructure bets, partnership deals, which signaled durable enterprise AI demand, and improving e‑commerce and advertising trends.
Over the past 52 weeks, the stock has gained 12.76%. However, the stock’s growth has also been muted by stiff competition in the cloud space amid high investor expectations. Amazon’s shares reached a 52-week high of $278.56 on May 5, but are down 14.4% from that level.
On a forward-adjusted basis, Amazon’s stock trades at a price-to-earnings ratio of 27.02 times, which is modestly stretched relative to the industry average of 17.03x.
Amazon Q1 Results Show Strong Cloud Growth and Chip Momentum
Amazon’s Q1 results showcased strong growth in its AWS segment, where net sales grew 28.4% YOY (its fastest growth in 15 quarters) to $37.59 billion, while its chips business exceeded a $20 billion revenue run rate, underscoring a triple-digit YOY growth rate.
Amazon’s overall revenue grew 16.6% from the prior-year period to $181.52 billion. This topped the analysts’ expected figure of $177.84 billion. The company’s EPS for the quarter was $2.78, up 74.8% YOY.
Free cash flow fell to $1.23 billion over the trailing twelve months, mainly because purchases of property and equipment rose by $59.30 billion YOY, net of sales and incentives. The increase was largely driven by higher investment in AI. Amazon expects its Q2 net sales to range from $194 billion to $199 billion, representing 16% to 19% YOY growth.
Wall Street analysts are optimistic about Amazon’s future earnings. They expect the company’s EPS to climb by 8.33% YOY to $1.82 for the current quarter. For fiscal 2026, EPS is projected to surge 7.5% to $7.71, followed by a 30% growth to $10.02 in fiscal 2027.
What Do Analysts Think About Amazon’s Stock?
Last month, analysts at Wells Fargo reiterated a bullish “Overweight” rating on Amazon’s stock, citing their conviction that AWS sits at the center of the cloud compute monetization story. They also lowered the price target by $1 to $312. However, this adjustment might just be the noise relative.
Amazon has been in the spotlight on Wall Street, with analysts awarding it a consensus “Strong Buy” rating. Of the 57 analysts rating the stock, a majority of 49 analysts have rated it a “Strong Buy,” five analysts suggest a “Moderate Buy,” while three analysts are playing it safe with a “Hold” rating. The consensus price target of $316.04 represents a 32.6% upside from current levels. The Street-high price target of $370 indicates a 55.2% upside.
