Should You Buy Amazon Stock Before July 31?

As Amazon (AMZN) prepares to report Q2 2025 earnings on July 31, investors face a critical decision: Should they buy the stock ahead of the results, balancing near-term tariff risks with long-term opportunities in AI-driven growth? Let's dissect the data to build a compelling case.

Q2 Earnings Preview: Navigating Tariffs and Growth

Analysts expect Amazon to report Q2 revenue between $159.0 billion and $164.0 billion, with an EPS estimate of $1.32. While tariffs on Chinese imports threaten margins—impacting third-party sellers who account for 62% of unit sales—the company's strategic moves could soften the blow. For instance, expanding Prime Day to four days (though post-Q2) signals a focus on retaining customer loyalty.

The real story lies in AWS and AI. AWS grew 17% YoY in Q1, contributing 19% of revenue and 63% of operating income. With over 1,000 generative AI services in development, CEO Andy Jassy calls AI a “substantial catalyst.” This aligns with Q1's 20% jump in operating income to $18.4 billion, driven by AWS's cloud dominance (32% market share).

Advertising Surge: A New Profit Lever

Amazon's ad revenue grew 18% YoY in Q2, now its fastest-growing segment. A partnership with Roku expanded CTV ad reach to 80 million households, while Prime Video's $3/month ad-free tier boosts engagement. This segment, paired with AWS's AI tools, positions Amazon as a dual-play stock: cloud infrastructure and digital advertising.

Tariff Risks: Manageable but Not Overwhelming

Tariffs could trim margins, but Amazon's playbook includes China direct sellers (who avoid tariffs by shipping directly to consumers) and cost-cutting measures like replacing plastic packaging with paper. Jassy emphasized maintaining low prices through supply chain agility—a strategy that worked during the pandemic. While Q3 guidance is cautious (operating income $11.5–$15.0 billion), these risks are already priced into the stock.

Valuation: A Discounted Growth Machine

Amazon trades at a P/E of 36.25 (TTM), far below its three-year average of 83. This valuation discount contrasts with its 12.46% annual stock growth and a 94% “buy/strong buy” analyst consensus (66/70 analysts). Morgan Stanley's $300 price target (33% upside from recent closes) underscores the undervaluation.

Technicals: A Bullish Signal Ahead of Earnings

• RSI (14-day): 65.56 (neutral-bullish, above 50).
• Moving Averages:
• 50-day MA: $207.29 (currently above the 200-day MA at $200.19).
• 5-day MA: $212.63 (suggesting short-term momentum).
• Fibonacci Pivot Point: $213.28 (key resistance level).

Technical indicators show a “Strong Buy” signal, with 8 positive signals vs. 0 negative.

Investment Recommendation

The strategic case for buying AMZN before July 31 hinges on three pillars:
1. AWS and AI: These segments are undervalued but critical to Amazon's future.
2. Ad Growth: A secular tailwind with untapped potential in CTV and streaming.
3. Valuation Discount: The stock trades at a historical low P/E, offering a margin of safety.

Risk Management: Set a stop-loss at $195 (below the 200-day MA) to protect against a tariff-driven earnings miss.

Conclusion

Amazon's Q2 results will test its ability to navigate tariffs, but the long-term narrative—AI-driven AWS growth and ad monetization—is too compelling to ignore. With a strong analyst consensus, favorable technicals, and a discounted valuation, investors who buy AMZN before July 31 position themselves to capture upside from underappreciated tailwinds. The risks are real, but the rewards are greater.

Final Call: Buy AMZN ahead of earnings, targeting $240–$250 by year-end. Stay disciplined, but bet on the future.