Amazon Soars 4.5% on Earnings Surge: Can This AI-Driven Rally Sustain Momentum?

Summary
• Amazon (AMZN) surges 4.5% to $255.24, hitting its 52-week high of $258.60
• Q3 earnings beat expectations, with AWS growth reaccelerating to 20.2% YoY
• Options frenzy: 47,787 contracts traded on 260-strike call, 14,514 on 240-strike call
• RSI at 69.7, MACD histogram at 2.32, and 200D MA at $214.45 below current price
Amazon’s Q3 earnings report ignited a 4.5% intraday rally, fueled by AWS’s 20.2% YoY growth and bullish AI sentiment. With options volume spiking and technical indicators flashing bullish signals, the stock’s breakout above key resistance levels has traders scrambling to position for a potential continuation.

AWS Reacceleration and AI Momentum Ignite Earnings Rally
Amazon’s 4.5% surge stems from its Q3 earnings report, where AWS reaccelerated to 20.2% YoY growth, exceeding Wall Street’s 18.1% forecast. CEO Andy Jassy highlighted AI-driven demand for cloud infrastructure, with AWS adding 3.8 gigawatts of capacity since 2022. The $9.5B pretax gain from Anthropic investments and 23.5% advertising revenue growth further bolstered results. Analysts at RBC and UBS cited the AWS momentum as a 'relief rally,' with Jassy’s emphasis on AI leadership countering prior concerns about lagging Microsoft and Google Cloud.

Data Processing Sector Trails as AWS Reclaims Cloud Leadership
While Amazon’s Data Processing & Outsourced Services sector leader Microsoft (MSFT) rose 0.34%, the broader sector underperformed relative to Amazon’s AI-driven rally. AWS’s 20.2% growth outpaced Microsoft Azure’s 18% and Google Cloud’s 16% Q3 growth estimates, reinforcing Amazon’s cloud dominance. The sector’s focus on payment processing and fintech contrasts with Amazon’s AI infrastructure bets, creating a divergence in momentum.

Options Playbook: Capitalizing on AMZN’s AI-Driven Breakout
• 200D MA: $214.45 (well below) • RSI: 69.7 (overbought) • MACD: 2.195 (bullish) • Bollinger Upper: $236.71 (broken) • 30D Support: $220.52–$221.15 • 200D Resistance: $228.84–$230.38
Amazon’s breakout above $255.24 and 52-week high of $258.60 signals a short-term bullish trend. Key levels to watch: $258.60 (intraday high) and $254.56 (intraday low). The 200D MA at $214.45 remains a critical support. With RSI near overbought and MACD divergence, a pullback to $250–$252 could offer entry points. The 260-strike call (AMZN20251107C260) and 255-strike call (AMZN20251107C255) stand out for their high leverage and liquidity.
• AMZN20251107C260 (Call): Strike $260, Expiry 11/7, IV 34.38%, Leverage 103.62%, Delta 0.36, Theta -1.12, Gamma 0.0363, Turnover $13.8M
• AMZN20251107C255 (Call): Strike $255, Expiry 11/7, IV 35.57%, Leverage 53.32%, Delta 0.548, Theta -1.536, Gamma 0.0372, Turnover $8.8M
Under a 5% upside scenario (target $268.00), AMZN20251107C260 would yield a 375% return (Payoff: $268.00 - $260 = $8.00). The 255-strike call offers 366% leverage with a 0.548 delta, ideal for capitalizing on continued AI-driven momentum. Both contracts benefit from high gamma and moderate theta decay, making them suitable for a 7-day holding period. Aggressive bulls may consider AMZN20251107C260 into a bounce above $260, while AMZN20251107C255 provides a safer entry with a 53.32% leverage ratio.

Backtest Amazon.com Stock Performance
Below is the interactive back-test report for the strategy you requested. (If the chart panel does not render automatically, please refresh the page.)Key take-aways (not duplicated in the chart):• The strategy delivered a cumulative return of ≈ 32 % from Jan-2022 to 2 Nov 2025, translating to an annualized return of ≈ 7.8 %. • Risk was moderate: the worst peak-to-trough draw-down was about 12 %, and the Sharpe ratio came in at 0.74. • Average trade gained 1.9 %, with winners averaging ≈ 6 % and losers limited to ≈ -4 % by the 5 % stop-loss. • Compared with a simple buy-and-hold in the same period (≈ 40 % raw price appreciation), the surge-following strategy produced smaller headline return but with materially lower draw-down and a more attractive risk-adjusted profile. Parameter choices: • Take-profit 10 % / stop-loss 5 % / max-hold 5 days were supplied as reasonable default intraday-momentum exits; feel free to adjust and re-run if you prefer different risk settings.Let me know if you would like deeper diagnostics (e.g., trade log, sensitivity tests, or comparison with alternative thresholds).

Amazon’s AI Breakout: Secure the 255–260 Range for Long-Term Gains
Amazon’s Q3 earnings and AWS reacceleration validate its AI-driven cloud strategy, with technical indicators and options activity pointing to a sustainable rally. The 255–260 range represents a critical consolidation zone before testing the 52-week high of $258.60. Investors should monitor the 200D MA at $214.45 as a final support level and watch Microsoft (MSFT) for sector leadership cues. With RSI near overbought and MACD divergence, a pullback to $250–$252 could offer a high-probability entry. Aggressive bulls may consider AMZN20251107C260 for a 7-day holding period, while AMZN20251107C255 offers a safer, leveraged play. If $255 breaks, the 250-strike call (AMZN20251107C250) provides a 31.79% leverage option for a mid-term hold.