Is Amazon's 15% Correction a Strategic Entry Point for Long-Term Investors?

The recent 15% correction in Amazon (AMZN) has sparked a heated debate among investors: Is this a buying opportunity or a warning sign? Let's dissect the technical and fundamental signals to determine whether this pullback is a strategic entry point for long-term investors.

Technical Analysis: A Mixed Bag of Signals

Amazon's technical indicators paint a nuanced picture. The 14-day RSI currently hovers around 59.128, suggesting a Buy signal, while the MACD at 0.590 also leans bullish according to technical analysis. However, the 200-day moving average at $231.74 acts as a bearish trigger, creating a divergence. On November 24, the RSI dipped to 40.65 (Neutral), and the MACD turned negative at -1.20, hinting at weakening momentum.

The stock's price action is equally telling. After hitting a peak of $258.60 on November 3, AMZN fell below its 50-day moving average by November 18, signaling a shift from bullish to bearish sentiment. A rising wedge pattern since mid-2024 adds complexity, with critical support levels at $230, $216, and $200. A breakout above $245.49 could target $290, while a breakdown below $221.20 risks a slide to $216.

Volume data offers a silver lining: Declining activity during pullbacks suggests weaker selling pressure, which could indicate a potential rebound. For now, the stock is in a sideways/neutral trend, oscillating around its moving averages without a clear directional bias.

Fundamental Analysis: A House Built to Last

While technicals are mixed, Amazon's fundamentals remain robust. Q3 2025 results highlight a 13% year-over-year revenue surge to $180.2 billion, driven by AWS, advertising, and international growth. AWS alone grew 20% YoY to $33 billion, cementing Amazon's 32% share of the global cloud market according to market analysis.

Financial health checks out: A debt-to-equity ratio of 0.14x reflects a conservative capital structure, while operating cash flow hit $130.7 billion TTM, underscoring strong liquidity. Even with free cash flow dipping to $14.8 billion TTM due to AI and infrastructure investments, the company's net profit margin of 11.06% and $21.2 billion Q3 net income according to financial reports demonstrate profitability.

Valuation metrics also favor bulls. At a P/E of 34.7x, Amazon trades below peers but above the industry average. A DCF analysis pegs its intrinsic value at $294.27, implying a 15.6% undervaluation. Analysts project a 20%+ EPS CAGR, fueled by AWS, AI-driven innovations like Trainium2, and expanding third-party services.

The Verdict: A Calculated Bet

For long-term investors, Amazon's correction offers a compelling case. Fundamentals are unshaken, with AWS growth and AI adoption providing a durable moat. The technical setup, while volatile, presents defined risk-reward scenarios: A breakout above $245.49 could unlock $290, while a breakdown to $216 would test conviction.

However, caution is warranted. The 200-day moving average remains a critical sell signal, and a sustained close below $216 could trigger further declines. Positioning here requires discipline-use the correction to accumulate, but set clear stop-loss levels.

In the end, Amazon's long-term story remains intact. As one analyst put it, "This is a temporary reset, not a reversal". For those with a multi-year horizon, the pullback could be the perfect entry point-just don't forget to lock in your stops.