Amazon Stock Price and News: AMZN better-than-expected earnings boosts Asia market sentiment

Update: Amazon (AMZN) closed on Wall Street down 7.81% to $2,776.91c per share, gapping from $2,977.27c to print a low of $2,766.66c. The price drop was technically significant as it drove through the $2,903 daily W-formation's neckline support.

This had left the weekly candle on the brink of a weekly bearish close and the stock leaning over the edge of the abyss where the $2,500's were exposed to the downside on a weekly chart analysis. 

However, Amazon shares were up a whopping 17% in extended trading after the company reported Q4 net income late Thursday of $27.75 per diluted share, up from $14.09 per share a year earlier.

For Q1, the company expected expects net sales at $112 billion to $117 billion. It stated that operating income would be at $3 billion to $6 billion. 

''Profit beat expectations, helped by the cloud-computing division, and investors cheered a price hike for the company’s Prime subscription service,'' Bloomberg reported, adding:

''The reaction highlights the importance of Amazon’s diversification from its e-commerce roots. Online store sales actually declined from last year’s blockbuster gains tied to the pandemic. Yet Amazon’s profitable cloud-computing and advertising businesses combined to more than make up for it.''

“Amazon has evolved into a true platform, as more than 50% of its revenue now comes from areas outside of first-party retailing, such as cloud computing and advertising,” said Deren Baker, chief executive officer of market research firm Edge by Ascential.

Meanwhile, Asian equity markets are supported by an Amazon-led bounce in US futures, driving Nasdaq 100 futures up 1.7% and bolstering sentiment in Asia.

End of update

Update: Amazon (AMZN) is down 7.56% heading into the daily close and earnings announcement, changing hands at $2,784.44 per share. US stocks came under selling pressure after local data failed to impress, and as more central banks joined the tightening train. The Bank of England and the European Central Bank came out more hawkish than anticipated, highlighting global inflation concerns. At the time being, Wall Street is a sea of red, with the Nasdaq Composite down over 430 points or 3%. 

Previous update: AMZN shares unexpectedly dropped ahead of earnings coming Thursday after the close. Fifteen minutes into Thursday's regular session, AMZN stock is down 5.2% at $2,855. The NASDAQ is down 2.2%, and most of the market carnage appears to be a consequence of Facebook's (FB) (now Meta Platforms) spectacular 25% plunge.

Amazon (AMZN) steps up to the plate on Thursday after the close, and things are decidedly shaky. It is the bottom of the ninth for equities, and a home run is badly needed. Things got off to a solid start as Apple (AAPL) maintained its batting average, and Google (GOOGL) then stepped up and smashed it over the fence. However, Meta Platforms (FB) last night struck out, and now earnings season and equity sentiment hang by a thread. Already NASDAQ futures are pointing sharply lower and risk assets are being hammered again. The market needs a big beat from Amazon. 

Amazon Stock News

Earnings per share (EPS) are expected to come in at $3.67, and revenue is expected to hit $137.6 billion. Last time out, Amazon missed on EPS by quite a distance and also missed on revenue. This time expectations have been accordingly lowered after FB. We spoke yesterday in advance of those numbers on how the smart play and risk-reward was favoring the downside for Meta. Apple and then Google had raised expectations. Meta shares had jumped 5% after Google (GOOGL) earnings. A beat was priced in, so a miss was severely punished. We were, however, surprised by the extent of the reaction.

Amazon Web Services accounts for about 15% of total revenue, and more notably over half of Amazon's operating income comes from Amazon Web Services. In that regard, we note this morning that Best Buy announces it is to use Amazon Web Services for its cloud services. We also note with interest the strong performance of the IBM and Microsoft cloud divisions. Both companies saw significant growth, and this impacted directly on both companies beating earnings estimates.

IBM grew its cloud revenue by 20% last quarter. "We increased revenue in the fourth quarter with hybrid cloud adoption driving growth in software and consulting," said CEO Arvind Krishna.

Microsoft reported revenue growth of 46% for its cloud business and forecast growth to accelerate in the next quarter. Data from Statista back in October showed Amazon having the largest share of the cloud market at 32%. Microsoft was in second place.

We expect Amazon Web Services to outperform and drive an earnings beat. Outlook should be in line with Microsoft and provide strong reassurance.

Amazon Stock Forecast: double top target is $2,600

Now we see the risk-reward skewed to the upside. Today is likely to see losses for big tech after Meta Platforms' share price collapse. AMZN is already down 3% in the premarket, and NASDAQ futures are negative this morning. Breaking $2,883 though has been a strongly negative move for AMZN. The stock has basically been in a large range for the last year with the occasional move above, but $2,883 always held as support. This year is the first time that level has been broken since July 2020. If it breaks again, Amazon is likely to retreat to the last consolidation zone highlighted at $2,500 to $2,300. 

If earnings do perform and the stock appreciates, the first target or resistance level is at $3,191. This is the point of control and also the lows from both August and October 2021. That will end the double top dominance currently at play. The target of the double top is $2,600, which has not yet been reached but is very close.

Amazon (AMZN) chart, 20 hourly

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