Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 31 Jan, 25 | AMZN | Buy | USD 234.64 | USD 255.76 | USD 274.53 | 32 days | 17.0% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
Amazon.com, Inc. engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS). It also manufactures and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Echo, Ring, Blink, and eero; and develops and produces media content. In addition, the company offers programs that enable sellers to sell their products in its stores; and programs that allow authors, independent publishers, musicians, filmmakers, Twitch streamers, skill and app developers, and others to publish and sell content. Further, it provides compute, storage, database, analytics, machine learning, and other services, as well as advertising services through programs, such as sponsored ads, display, and video advertising. Additionally, the company offers Amazon Prime, a membership program. The company's products offered through its stores include merchandise and content purchased for resale and products offered by third-party sellers. It serves consumers, sellers, developers, enterprises, content creators, advertisers, and employees. Amazon.com, Inc. was incorporated in 1994 and is headquartered in Seattle, Washington.
Surge in Free Cash Flow: Free cash flow increased significantly by 123%, from $21.4 billion in the trailing twelve months ending September 30, 2023, to $47.7 billion for the trailing twelve months ending September 30, 2025. This substantial growth in cash flow demonstrates the company’s enhanced financial position and ability to reinvest in its business.
Increase in Net Sales and Segment Growth: Amazon achieved an 11% increase in net sales, reaching $158.9 billion in the third quarter, compared to $143.1 billion in the same period last year. Additionally, the AWS segment experienced a 19% growth in sales, totaling $27.5 billion, highlighting the strength of Amazon’s cloud business.
Increased Operating Expenses: Despite the strong growth in revenue and operating income, Amazon’s operational expenses related to its expansion initiatives, such as its investments in delivery services and new technology developments, represent a significant ongoing cost. Although specific expense figures are not mentioned, the need for continued investment in these areas could strain profitability margins in the future.
Foreign Exchange Impact: Amazon faced a $0.2 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the third quarter. While this was relatively small in the context of overall performance, it reflects a challenge the company faces in global markets due to currency fluctuations.
Key investment risks for Amazon include its reliance on global supply chains and fluctuating foreign exchange rates, potential regulatory scrutiny in its diverse markets, and the ongoing high costs associated with its expansive investments in technology, logistics, and content creation.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 234.64 | 204.14 | 255.76 | 274.53 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Amazon’s Strong Third-Quarter Financial Performance
Amazon’s net sales for the third quarter of 2025 increased by 11%, reaching $158.9 billion, up from $143.1 billion in the third quarter of 2023. Excluding the unfavorable impact of $0.2 billion from foreign exchange rate fluctuations, net sales still saw an 11% growth compared to the same period in the prior year. This growth was driven by strong performance across various business segments, with North America, International, and AWS all reporting significant sales increases.
Segment Performance and Growth Across Markets
The North America segment generated $95.5 billion in sales, representing a 9% increase year-over-year. The International segment experienced an even stronger performance, with sales rising by 12% to reach $35.9 billion. Amazon Web Services (AWS) achieved the highest growth among all segments, with sales soaring by 19% to $27.5 billion. This broad-based growth across geographical markets and business units underscored Amazon's strong operational momentum.
Increased Operating Income and Profitability
Operating income in the third quarter surged to $17.4 billion, compared to $11.2 billion in the same period last year. This improvement was primarily driven by the growth in net sales and efficient cost management. The North America segment saw operating income rise to $5.7 billion, an increase from $4.3 billion in the third quarter of 2023. The International segment reversed its operating loss from the previous year, reporting an operating income of $1.3 billion, up from a loss of $0.1 billion. AWS also posted a strong operating income of $10.4 billion, a substantial increase from $7.0 billion in the previous year.
Net Income and Cash Flow Surge
Amazon’s net income for the third quarter reached $15.3 billion, or $1.43 per diluted share, compared to $9.9 billion, or $0.94 per diluted share, in the same quarter of 2023. The company’s operating cash flow also saw a significant increase, rising by 57% to $112.7 billion for the trailing twelve months, compared to $71.7 billion in the previous year. Free cash flow, a key measure of liquidity, rose to $47.7 billion, up from $21.4 billion, reflecting Amazon’s strengthened financial position.
Strategic Developments and Customer Engagement Initiatives
Amazon’s strategic initiatives over the quarter were notable, with the company achieving record sales and Prime member participation during its annual Prime Big Deal Days shopping event. The event saw significant savings for Prime members, with over $1 billion in discounts. Additionally, Amazon introduced several innovative services, including an exclusive fuel savings offer for U.S. Prime members and an expanded portfolio of brand partnerships. In the healthcare sector, the company announced plans to expand its Amazon Pharmacy Same-Day Delivery service to nearly half the U.S. by 2025.
Innovation and Technological Advancements in AI and Cloud Services
In terms of technological advancements, Amazon launched several generative AI-powered features across its platforms. These included Rufus, an AI shopping assistant, AI Shopping Guides to assist customers with product research, and Project Amelia, an AI tool for sellers to optimize their operations. AWS also introduced several new AI capabilities, including partnerships with Databricks and new foundation models in Amazon Bedrock and SageMaker. Furthermore, AWS rolled out next-generation EC2 instances, enhancing compute and memory capabilities, which positions the company for continued leadership in the cloud market.
Sustainability and Global Impact Initiatives
Amazon continued to focus on sustainability and global impact, with initiatives aimed at reducing plastic usage and supporting communities in times of crisis. The company removed plastic air pillows from its packaging globally and increased the use of recycled paper filler in North America. Amazon also made significant investments in disaster relief efforts, mobilizing resources to assist communities affected by hurricanes and flooding. In the U.S., the company supported these efforts through its Disaster Relief Hub, while in Europe, Amazon deployed its logistics infrastructure to aid in flood recovery.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Amazon.com (NASDAQ: AMZN) at the closing price of USD 234.64, as on January 30, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Consumer Cyclical Industry: Internet Retail
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| AMZN Amazon.com Inc |
2.92 1.53% | 193.18 | 50.46 | 44.05 | 3.37 | 9.59 | 3.45 | 22.21 |
| BABAF Alibaba Group Holding Ltd |
- -% | 16.58 | 19.26 | 8.76 | 1.58 | 1.54 | 1.36 | 8.84 |
| PDD PDD Holdings Inc. |
3.74 3.16% | 122.09 | 20.54 | 13.26 | 0.62 | 5.93 | 0.50 | 1.74 |
| BABA Alibaba Group Holding Ltd |
0.40 0.30% | 132.63 | 10.59 | 7.29 | 0.21 | 1.28 | 0.14 | 0.91 |
| MELI MercadoLibre Inc. |
-34.89 1.79% | 1915.98 | 76.32 | 45.05 | 5.06 | 23.84 | 5.17 | 30.47 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is January 30, 2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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