While Amazon.com did not join fellow Magnificent Seven members Alphabet and Meta Platforms on the latest list of new buys by the best mutual funds, the retail and web services giant continues to flash clear signs of demand. That demand accounts for just one of four reasons investors should keep an eye on Amazon stock right now.
It's also worth noting that with Nvidia and Meta recently removed from the Investor's Business Daily Leaderboard, only Amazon and Alphabet hold a spot on that list among Mag 7 members.
1. AWS Fuels Strong Forecasts
Its prominence in retail is not the only reason Amazon now dwarfs Walmart in terms of market capitalization. The power of Amazon Web Services, or AWS, stands as a key reason Amazon's more than $2.5 trillion market cap smashes Walmart's $817 billion.
Wall Street sees solid profit growth ahead for Amazon. Forecasts call for a 20% pop in earnings expansion to $6.65 per share in 2025, followed by a 14% gain in 2026 to $5.86 a share. Analysts have recently raised estimates, a bullish sign.
Amazon stock is also being boosted by its stake in artificial intelligence startup Anthropic. Roth Capital partners analysts believe a recent funding round by Anthropic could boost spending on AWS.
Nvidia Goes AWOL As Funds Feast On Broadcom, Google, Palantir – And Much More
2. Clear Demand For Amazon Stock
Signs of demand for shares in Amazon include a B Accumulation/Distribution Rating and a 1.6 up/down volume ratio. For the latter, any score above 1.0 points to demand.
While Alphabet stock tops those scores with an A- Accumulation/Distribution Rating and a 2.1 up/down volume ratio, Amazon beats Nvidia and Meta. Nvidia rates a D- and 1.0, while Meta earns a B Accumulation/Distribution Rating and a 0.9 up/down volume ratio.
Further showcasing demand for Amazon, a massive 605 funds with an A+ rating from IBD own shares of the stock.
3. Telltale Signs Of Rising Technical Strength
As showcased by Nvidia's recent struggles, action around key moving averages has come into focus in the market indexes and individual stocks.
While Nvidia remains below its 50-day moving average, Amazon has shown stronger technical action. The stock trades above its 21-day exponential moving average and its 50-day line. And in a sign of rising technical strength, the 21-day line bounced off the shorter-term 50-day benchmark earlier this month.
In a sign of rising market leadership, the relative strength line has also started to trend upward.
4. Amazon Stock Delivers Fresh Breakout
Building on its gap up on Sept. 4, Amazon stock has jumped into a 236.53-248.36 buy zone from an early-stage flat base. The new pattern is early stage because Amazon reset its base count by undercutting the low in its prior base in February. That potentially sets the stage for an extended new climb.
Fellow IBD Leaderboard stock Alphabet continues to notch record highs. And while Nvidia remains mired below its 50-day line, Meta has climbed above that benchmark and has just retaken its 21-day line.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
