Amazon ( NASDAQ: AMZN ) plunged to a 52-week low earlier this year, dragged down by the general slide in the markets, amid higher interest rates and worries about the economy. However, recently, shares have surged, jumping more than 40% off their lows.
The recent upswing has come as investors bet that the Federal Reserve can tamp down inflation without triggering a recession. Meanwhile, AMZN also benefited from a well-received earnings report, which allowed the stock to reach its highest mark since April.
Given the recent jump in its stock, does AMZN remain a buy, even in the face of economic uncertainty?
Earnings Relief Rally or Renewed Growth?
Late last week, Amazon ( AMZN ) released a quarterly report that reassured investors that the online retailer was managing the current environment. Despite a massive loss triggered by one-time charges, the company showed better-than-expected top-line growth.
Looking at the numbers, AMZN’s revenue figure rose 7% from last year, jumping to a total of $121.2B. This was more than $2B above the amount analysts were looking for.
This advance was led by its AWS internet business. This portion of the company experienced 33% sales growth. AMZN also saw surprisingly strong performance in advertising.
Meanwhile, investors discounted the firm’s $2B loss for the quarter. This bottom-line figure included a $3.9B charge related to the firm’s stake in electric vehicle company Rivian ( RIVN ), which has lost about 65% of its value in 2022.
AMZN surged in the wake of its quarterly report, posting a double-digit percentage gain in the following session. This is part of a general rally that has taken place since mid-June.
Shares of the Jeff Bezos-founded company dropped from an all-time high of $188.65 reached in July of 2021 to a 52-week low of $101.26. This represented a slide of about 46%.
Since hitting that nadir, the stock has seen an upswing. This has coincided with a general rebound in the overall market. This can be seen in a recent surge in other megacap names.
Overall, the S&P 500 has climbed 11% since mid-June.
Is AMZN a Buy?
That means the other 50 analysts, or 96% of the total, have issued upbeat assessments. The breakdown includes 36 Strong Buy ratings and 14 Buy ratings.
Looking at quantitative measures of AMZN’s performance provides a more mixed view. Seeking Alpha’s Quant Ratings grade the stock as a Hold. While it gets high marks for profitability and momentum, the system has marked a significant red flag in its valuation.
Specifically, AMZN gets an A+ for profitability and an A- for momentum, along with a B for growth. However, for valuation, the Quant Rating system has issued a dismal F.
For a deeper dive into Amazon’s earnings, look at a report issued by Seeking Alpha contributor Albert Lin, who said the figures came in “better than feared.” Meanwhile, fellow SA contributor JR Research has concerns that the company is “no longer the fast-growing behemoth.”
For further details see:Amazon has surged 40% from its 52-week low on strong AWS performance. Should you buy here?