Amazon shares on the verge of a 40% rally.

A 7% jump in Friday’s pre-market session should tell you all you need Amazon.com Inc. NASDAQ:AMZN Fourth quarter results. The e-commerce giant released them after the bell rang to end Thursday’s session in one of the most anticipated reports so far of the earnings season.

Across the board, Amazon exceeded expectations. Their earnings per share of $1 were 25% higher than the 80 cents analysts expected, while revenue for the quarter was nearly $4 billion higher. With consumer spending on the rise, the holiday quarter is always Amazon’s most promising quarter, and there’s no doubt that it delivered this time.

Strong performance

Beyond the headline numbers, Amazon’s free cash flow for the trailing 12 months was $36.8 billion, more than triple what it was last year. Improvements to the efficiency and speed of its U.S. logistics network have enabled Prime members to achieve the fastest delivery times ever while reducing service costs.

The company’s advertising services performed well, as did the ever-popular Amazon Web Services cloud segment, a big money maker over the next few years, and with a couple of quarters of mediocre growth, it once again showed its promise with a year of growth of 13%. per year.

Improving macroeconomic backdrop for cloud spending will help with better inflation readings and rising rate cut expectations. Amazon shares have already rallied more than 30% since late October on the back of these positive factors, and investors can expect even bigger gains from last night’s report.

Amazon was unique among the big names in technology like The Apple company. NASDAQ:AAPL, Meta Platform Inc. NASDAQ: META AND Alphabet Inc. NASDAQ:GOOGL in recent months as the only one still trading below its 2021 high. But if there were any doubts about this outcome in 2024, they were certainly swept away last night.

Bullish outlook

Despite the recent rally in its stock price and strong holiday performance, Amazon’s outlook is only improving and becoming more bullish. They now expect first-quarter sales to grow to $143.5 billion, up from the previous consensus of $142 billion, and similar upside comes to operating income as well.

People like Piper Sandler were quick to praise the results and call for an immediate rise in the shares. Analyst Thomas Champion said he is particularly optimistic about the effects of generative artificial intelligence (AI) on Amazon’s profits in the next quarter. He had no problem giving the stock a new price target of $200.

The Barclays team topped it with a $220 price target and the JPMorgan team topped it with a $225 price target. From where the stock closed on Thursday, that calls for an immediate upside of about 40%. If Amazon shares reach this level in the next few weeks, they would surpass their 2021 high level and join their fellow tech titans in the new club of all-time highs. For those of us on the sidelines and considering a position, it doesn’t get any better. There is the fundamental performance angle, the improving macroeconomic environment angle, and the recovery angle.

Look for Amazon stock to open Friday morning and gain over the weekend. Based on the report and bullish commentary, there is every reason to think that last night was the last time Amazon traded for less than $160.

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