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Amazon - AI Stock Analysis

Analysis generated May 14, 2024

Amazon, founded by Jeff Bezos in 1994, started as an online bookstore and has since evolved into a global e-commerce and cloud computing giant. The company's primary revenue streams include online retail, subscription services such as Amazon Prime, and Amazon Web Services (AWS), their highly profitable cloud computing segment. Amazon also engages in numerous other businesses, ranging from digital streaming to artificial intelligence, indicating a diversified business model.

Fundamental Analysis

For the last quarter, Amazon reported revenue of $143 billion. This signifies a decrease of 15.79% compared to the previous quarter, which can be concerning, especially for short-term investors. However, on a year-over-year basis, this revenue figure represents a 12.63% increase, indicating healthy long-term growth.

The company's net income for the last quarter was $10.4 billion. This reflects a decrease of 1.82% compared to the previous quarter, another point of concern for short-term financial health. On the other hand, the 228.85% increase compared to the same quarter last year demonstrates impressive year-over-year profitability.

Amazon's EBITDA for the last quarter was $14.5 billion, a 12.02% decrease compared to the preceding quarter. Yet again, compared to the same quarter last year, it shows a significant increase of 123.19%, which indicates an expanding operational efficiency over the long term.

The current P/E ratio stands at 52.66, which may be interpreted as high, suggesting the stock could be overvalued according to standard valuation metrics. This could potentially lead to a bearish outlook by value-focused investors. Additionally, recent insider selling might heighten these concerns, signaling a potential lack of confidence from within the company.

Technical Analysis

Today's stock price is $186.57, marking an increase of 0.24% compared to a month ago, indicating a positive short-term trend. Over the past year, the stock has soared by 67.78%, suggesting a very bullish long-term trend.

The current 10-day Simple Moving Average (SMA10) stands at 187.68, slightly higher than the previous SMA10 of 187.64, indicating a potential continuation of upward price movement.

However, the Relative Strength Index (RSI) is at 73.8, which indicates an overbought condition and could be a bearish signal. Investors might want to exercise caution or look for potential pullbacks.

Alternative Data Analysis

Starting with job postings, Amazon currently has 18,000 open positions, reflecting a 44% increase over the last couple of months. This suggests that Amazon is in a growth phase, potentially a healthy sign from an expansion perspective.

Employee sentiment remains neutral, raising no significant red flags but also not offering strong positive outlooks.

On the customer acquisition front, Amazon's website has garnered around 3.25 billion visitors. This number has seen a 13% decrease in the past couple of months, indicating a possible loss of customers, which is concerning.

Similarly, the company has an estimated 110,000 daily downloads for their mobile apps, marking a 10% decrease—a worrisome trend pointing to declining customer engagement.

Regarding customer engagement, Amazon's Instagram followers have grown by 3% to 4.8 million, hinting at increased interest. Conversely, their Twitter followers are down by 1% to 6 million, indicating a minor loss of interest.

AltIndex's AI score for Amazon is 58, which is a hold signal. This metric incorporates fundamental, technical, and alternative data to offer a comprehensive stock recommendation.

Conclusion and Recommendation

Based on the analysis of Amazon's fundamentals, the company shows strong year-over-year growth in revenue, net income, and EBITDA. However, the recent quarterly declines in these metrics and a high P/E ratio raise short-term concerns. Technical analysis suggests a bullish trend, but an overbought RSI calls for caution. Alternative data presents a mixed picture: while job postings show growth, the decline in website visitors and app downloads indicate customer acquisition challenges.

Taking into account all these factors, the stock presents a cautious but potentially rewarding investment opportunity. The high growth rates in fundamental metrics, despite recent quarterly drops, combined with the bullish long-term trend in stock price, suggest that Amazon's long-term prospects remain strong. However, potential investors should remain vigilant regarding short-term fluctuations and overbought conditions.

Given the current state of Amazon's stock, my recommendation is to "Hold" as per AltIndex's AI score of 58. Investors should keep an eye on upcoming quarterly reports and other key performance indicators before making any new investment decisions.