From Yahoo Finance reporter Pedro Goncalves:
Amazon was higher in pre-market trading after rising over 4% on Thursday’s session as retail bellwether Walmart good results soothe recession fears across markets.
Despite the momentum, Amazon shares are down 15% from a record high of $201.20 (£155.94) reached in July, leaving many investors wondering if it’s time to buy the stock while it is undervalued.
“And just like Meta’s (META) sell-off post 1Q24, we believe Amazon’s recent stock pullback offers a decent entry point with the fundamental story just as strong as pre-earnings, albeit with expectations reset lower,” Bernstein analysts wrote.
The research firm expects strong growth for Amazon’s operating income and free cash flow despite lower-than-expected sales for the second quarter.
“The operating income inflection story remains intact with further contribution from robust Amazon Web Services growth, advertising re-acceleration in (second half of 2024) from Prime Video ad ramp, and steady retail margin expansion while prioritising gross profits,” the note said.
Amazon has said it has plans to boost spending on AI-related infrastructure for its Amazon Web Services cloud division.