Amazon is the IBD Stock of the Day for Thursday. Amazon's stock is continuing to rebound from key support on news, flashing an aggressive entry for the tech titan on a day when hot inflation data is weighing on major stock indexes.
The gains for Amazon stock come as Wall Street analysts are offering mostly positive takes on the company's grocery expansion plans. Amazon said Wednesday that it will soon offer same-day delivery of perishables in 2,300 U.S. cities and towns by the end of the year. Amazon previously only offered perishable items through its Whole Foods and Amazon Fresh brands. Now they will be available on the much larger Amazon.com, with the option to add fresh grocery items to standard orders.
The announcement sent Amazon stock higher. Shares of on-demand delivery platforms fell, especially Instacart parent Maplebear, but also DoorDash and Uber Technologies. Walmart stock also closed the day lower.
Those gains have carried over into Thursday trading. Amazon stock gained 2.9% to close at 230.98 on the stock market today.
Amazon stock is ahead about 5% year-to-date. That marks a major recovery from the steep slump this spring, when tariffs appeared as a significant threat to Amazon's e-commerce operations.
Big Grocery Opportunity For Amazon
Analysts are generally bullish on Amazon's plan.
Morgan Stanley analyst Brian Nowak wrote Thursday that grocery spending represents the largest remain "bucket of offline U.S. consumer spending," at $1.5 trillion.
"Competition for users and wallets is high and rising, with consumers focused on price, selection, delivery time/convenience," Nowak wrote. "We believe Amazon's first-party inventory and logistics model (with growing automation), leading first-party data sets and Gen AI capabilities (for agentic commerce) position the company to win."
Winning more grocery spending could drive more spending toward Amazon overall.
"Fresh grocery has been a significant missing piece in Amazon's offering vs. competitors, such as Walmart and Target," BofA Securities Justin Post wrote to clients Thursday. "With better grocery capabilities, Amazon should see important customer frequency benefits and potential lock-in with weekly grocery shopping not achievable in other verticals."
Still, Amazon has been trying to capture more of the grocery market for years, underscored by its $13.7 billion purchase of Whole Foods in 2017. It still trails Walmart for online grocery market share, according to analyst estimates.
Analysts with Bernstein said Walmart remains best-positioned for grocery sales, in a Thursday client note. The retailer's 4,600 stores allows it to offer rapid delivery throughout the country. Meanwhile, Instacart, DoorDash and Uber can offer access to a wide range of grocery stores, quick delivery and benefits for paid subscribers.
Amazon already generated $100 billion in grocery related sales last year, Bernstein estimates, though that is skewed toward nonperishable items. Its new offering is "more competitive" but has challenges to clear, the Bernstein note said.
"For now, it stands separate to Whole Foods and Fresh offerings, which may create a bit of consumer confusion, selection is limited, and fulfillment windows are quite wide (up to 6 hours)," Bernstein analyst Zhihan Ma wrote Thursday.
Amazon Stock Bouncing Back After Q2 Slide
The grocery news is helping restart momentum for Amazon stock after a rough start to the month. Shares pushed back above Amazon's 21-day moving average and offered an early entry at 226.22, which represents last week's high point.
Amazon stock is down about 2% overall in August, however.
Amazon slid 8.3% on Aug. 1, following its Q2 earnings report. That pushed shares below 214.84 cup-with-handle buy point as well as an alternate 218.40 entry.
Investors could view the July 31 high of 236.53 as the start of a new, messy handle.
Amazon's results showed cloud revenue growth just in-line with estimates. Compared to stronger cloud growth at Microsoft and Google, Amazon's Q2 raised concerns that the company's two smaller cloud competitors were winning the battle for AI-related business.
That view overshadowed otherwise solid results. Earnings grew 33% year-over-year to $1.33 per share while revenue increased 13% to $167.7 billion, topping top and bottom line estimates.
The IBD Stock Checkup tool shows Amazon stock holds an IBD Composite Rating of 92 out of a best-possible 99. The score combines five separate proprietary ratings into one rating.
Amazon's Relative Strength rating is still a so-so 69 out of 99, however. But an Accumulation/Distribution Rating of B- indicates that institutions are doing more buying than selling.
Amazon is the largest stock in the Retail-Internet group tracked by IBD. The group has performed well overall this year. It ranks No. 8 among 197 industry groups, based on six-month price performance. The overall group is up 36% year to date.
