Amazon.com, Inc. (AMZN) is rapidly approaching the $1,000.00 per share milestone that would put its market capitalization at close to half a trillion dollars.
While the company surpassed analyst estimates during the first quarter, it’s rapidly approaching overbought levels from a technical standpoint, which could lead to some near-term consolidation. The upshot is that the trend remains decidedly bullish for long-term investors and traders should maintain a bullish bias in their trades.
The company reported first-quarter revenue that rose 22.5% to $35.7 billion—beating consensus estimates by $400 million—and earnings per share of $1.48—beating consensus estimates by $0.35. Amazon Web Services (AWS) continues to be a significant driver of financial results with sales jumping 43% year-over-year to $3.66 billion, despite growing competition from Microsoft Corp.’s (MSFT) Azure, Alphabet Inc.’s (GOOGL) Cloud Services and similar service providers.
From a technical standpoint, the stock is approaching trend line resistance at the upper end of its price channel after breaking out from R2 resistance at $984.79. A relative strength index (RSI) reading of 74.60 suggests that the stock may be overbought and experience trouble breaking through the resistance levels. However, the moving average convergence divergence (MACD) remains bullish and suggests the long-term trend remains higher.
Traders may want to watch for some near-term consolidation near the $1,000.00 level given the overbought nature of the stock; however, the long-term trend remains higher. The company expects second-quarter revenue to be between $35.25 billion and $37.75 billion with operating revenue between $425 million and $1.075 billion — slightly lower than consensus estimates, but the company tends to beat its own estimates.
Charts courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively-managed index funds.