Amazon.com, Inc. (NASDAQ: AMZN) continues its impressive run in 2024, with its share price hovering near its all-time high of $189.94. This appreciation is fueled by several factors. First, Amazon’s expansion into South Africa highlights its global ambitions and its commitment to establishing strong local partnerships. Second, the ongoing boom in Artificial Intelligence (AI) is driving a surge in data center investments, potentially benefiting Amazon Web Services (AWS), the company’s highly profitable cloud computing arm.
However, regulatory headwinds from the European Union regarding potential antitrust breaches and data privacy concerns pose challenges. Despite this, Amazon appears unfazed, recently striking a deal with Telefonica Germany to migrate a significant portion of its 5G customers to AWS, marking a significant step towards breaking into the global telecoms market. Additionally, Amazon is taking concrete steps towards environmental sustainability by deploying its first electric seaport trucks, a move that could significantly reduce tailpipe emissions.
Technical Analysis (1-Day Chart)
The technical outlook for Amazon aligns with its positive fundamentals. The share price is currently trading above all three key moving averages [50-SMA (blue line), 100-SMA (orange line), and 200-SMA (red line)], with the 50-SMA positioned comfortably above the longer-term averages. This reinforces the uptrend and suggests strong buying pressure.
Additionally, the Relative Strength Index (RSI) at 61.30 sits firmly above the midline, indicating room for further upside potential. A sustained push above the all-time high could see the 23.60% Fibonacci extension level ($195.51) as the initial target, with $198.96 (38.20% Fibonacci extension) and $201.74 (50.00% Fibonacci extension) potentially coming into reach if the momentum continues.
However, the markets should be aware of potential downside risks. A sustained break below the current price level, particularly if it falls through the 50-SMA, could see initial support at $166.50. A decline below this level, with significant volume, could expose lower support zones at $154.80 and $144.08.
Summary
Amazon’s strong fundamentals and bullish technicals paint a compelling picture for investors. The company’s expansion efforts, its leading position in cloud computing, and its commitment to sustainability bode well for its future. The short-term technical outlook suggests a potential upside towards the $195.51 and $201.74 levels. However, the market should be mindful of potential profit-taking near all-time highs and monitor the $166.50 support level for signs of a potential pullback.
Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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