Amazon is an e-commerce colossus serving hundreds of millions of customers with rock-bottom prices and fast delivery. However, its status as online retail’s most successful company isn’t what’s behind its rocketing stock price.
Instead, investors have piled into Amazon stock on optimism that it will benefit from a surge in spending on artificial intelligence. Amazon Web Services is the market-share leader in cloud data solutions, making it ground zero for AI research and development.
The potential to profit from demand associated with training and operating AI apps has helped Amazon’s share price swell 85% in the past year and 14% year-to-date.
The rapid runup is good news for investors, but it does raise the question: What happens now?
In November Real Money Pro’s Bruce Kamich calculated a $200 price target for Amazon shares. They haven’t reached Kamich’s target, but the gains have been significant enough to prompt him to update his analysis, including a revamped price outlook.
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To make more space, the Dow decided to jettison Walgreens Boots Alliance (WBA) , the nation’s largest pure-play pharmacy chain.
Amazon was a natural fit for inclusion because it already boasts a $1.8 trillion market cap, and its reach includes retail and technology. Following its addition, Amazon now accounts for about 3% of the Dow Jones Industrial Average.
Amazon’s charts reveal updated price target
Bruce Kamich is a technical analyst who has professionally analyzed price and volume charts and indicators for more than 50 years.
His experience using technical analysis enabled him to correctly be bullish on Amazon shares last summer, turn bearish on them in September, and calculate a price target of more than $200 in November when the shares were trading below $150.
Now that Amazon shares are near $175, Kamich recently updated his analysis, resulting in a new target price.
Amazon shares “have advanced since early 2023, but trading volume has been decreasing for more than a year,” wrote Kamich. “Old-time chart readers like myself would rather see trading volume increase in the direction of the trend.”
Kamich also noted that while the on-balance volume, a measure of up minus down day volume, is positive, it’s only “back to the levels seen in 2021 and early 2022.” He’s also somewhat concerned that the moving average convergence divergence oscillator, a momentum indicator, has “started to narrow.”
That’s not very bullish because it could suggest that Amazon’s rally is running out of steam.
Nevertheless, Kamich’s point-and-figure chart price calculations offer Amazon shareholders reassurance. Using a daily and weekly P&F chart, Kamich calculated Amazon price targets of $199 and $223, respectively.
The $223 price target is particularly alluring, but investors should remember that P&F charts don’t predict time frames, and there’s no guarantee that price targets will be met.
Kamich also says that if Amazon trades below $166, the daily price target may weaken, so investors will want to keep tabs on the shares to see how they act in the coming weeks.
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