Amazon Soars to New Highs: Investors Bet on AWS and Holiday Cheer
1min read Amazon achieved an intraday high on Wednesday, with its stock surging nearly 3.3%, which in turn propelled the Nasdaq 100 Index to record levels as well. Analysts indicate that despite reaching these new peaks, Amazon's stock valuation remains relatively low. This development underscores the ongoing favoritism towards large tech firms among investors.
On the same day, Amazon's stock traded as high as $206.08, surpassing the highest mark since July. Although its gains later eased to around 2%, since its August low, Amazon's stock has risen by over 25%, bringing its total gain for the year to 32%. This performance outpaces the Nasdaq 100's 23% increase, highlighting Amazon's standout role amidst the broader market upswing following the U.S. elections.
Amazon's recent robust performance is attributed to its strong quarterly financial results, particularly the outstanding growth in its Amazon Web Services (AWS) division, which is expected to benefit from long-term AI-related opportunities. Furthermore, the company has projected optimistic sales expectations for the upcoming holiday season, which has also buoyed investor confidence.
Improved profitability has eased concerns over Amazon's valuation. Although its price-to-earnings ratio stands at 29, exceeding the Nasdaq 100's average, it remains significantly below the stock's average P/E ratio of over 53 in the past decade.
Amazon continues to be a consensus favorite on Wall Street, with about 94% of analysts recommending a buy. Moreover, the current stock price is approximately 15% below the average target price projected by analysts, indicating a potential for continued upward movement over the next 12 months.