Why Amazon Could Be the Best Big Tech Investment of Q1
Shares of tech giant Amazon.com Inc. (NASDAQ: AMZN) have been on a major uptrend for over two years now. They've tacked on nearly 200% of gains in that timeframe, with 50% the past year alone. This impressive performance underscores the company's resilience and adaptability in an ever increasingly competitive tech landscape. While there have been minor pullbacks along the way, each dip has really only created an enticing entry point for investors looking to get a slice of Amazon.
Last night's earnings report looks like it might have created the latest dip for investors to take advantage of. As we'll see below, there were a few concerns flagged from the report, but as we head into the rest of 2025, Amazon's strategic investments in artificial intelligence (AI) and cloud computing position look to be set up well for continued success. Let's jump in and take a closer look at why Amazon could still be the best big tech buy of Q1.
Amazon Delivers a Blowout Quarter With Record Revenue and EPS
Looking at the numbers from February 6, 2025, it must be noted that Amazon smashed expectations across both headline numbers. EPS landed a full 25% higher than the consensus, while revenue was up more than 10% on the year and at an all-time record.
This was a positive report overall, though with some eyebrows raised at the lighter-than-expected first-quarter guidance for 2025. Against a consensus of $158.33B for net sales, they're now expected to be between $151B - $155.5B. However, at the same time, this was mostly explained by what Amazon called "an unusually large and unfavorable" FX rate change.
Though this cautious guidance initially has led to some softness in Amazon shares in Friday's pre-market session, it should be no cause for concern. If anything, it's opening up a solid entry point for those of us who are still bullish on Amazon's long-term potential.
Analyst Sentiment Points to New Highs for Amazon Stock
Speaking of that, the many analysts covering Amazon stock seem to agree. In the aftermath of last night's report, the team over at Rosenblatt Securities was quick to reiterate their Buy rating and even boosted their price target from $236 up to $287.
That's a significant jump and clearly reflects their renewed optimism in the company's direction.
Considering that Amazon closed Thursday night at $238, Rosenblatt's price target is pointing to a targeted upside of 20%, and it would easily have shares trading in the blue sky territory they've become so accustomed to.
It was a similar stance from the likes of Benchmark earlier this week, who did the same, and a run of their peers throughout January, too. Don't be surprised to see more weigh-in with refreshed and boosted price targets in the coming days.
Lighter-Than-Expected Guidance Raises Some Questions
Still, it has to be acknowledged there were some cracks in the report, in addition to the lighter-than-expected forward guidance. Subscription services sales, for example, grew less than expected, while forecasted operating income also underwhelmed.
However, for the most part, there seemed to be a strong consensus that when compared to some of their peers, Amazon's AWS platform remains the best-positioned to challenge Chinese competition in AI. On this point, CEO Andy Jassy has stated that the cost of AI is set to "substantially come down," a shift that stands to benefit both Amazon's business and its customers.
Amazon Stock Presents a Strong Buying Opportunity Post-Earnings
For those of us on the sidelines, you can't help but feel now might be as good a time as ever to buy into the growth machine that is Amazon. Backing up the timing aspect of this outlook is the fact that the stock's Relative Strength Index (RSI) currently sits at 61, indicating there's plenty of room for upward momentum before it reaches overbought territory.
This technical setup, combined with Amazon's strong fundamentals and bullish analyst outlooks, suggests that investors should be looking at further gains heading into the rest of the year. Let's see how shares trade into the weekend as Wall Street continues to digest the numbers but don't be surprised if Amazon is back trading at a record high before too long.
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