Investor Alert: Buy Amazon Stock Ahead of Q2 Earnings

Investors should think carefully about buying shares Amazon (NASDAQ:AMZN) before the e-commerce giant announced its second-quarter financial results on August 1 this year.

Amazon shares have gained 40% over the past 12 months, a major turnaround for a company that struggled for nearly two years after emerging from the pandemic. After overstaffing and rebuilding during the COVID-19 crisis, Amazon was forced to downsize its operations and adapt to the return of in-person shopping.

AMZN stock also saw a bear market decline in 2022 as inflation peaked at 9.1% and interest rates rose to a 22-year high.

While it wasn’t easy, Amazon emerged from the storm stronger than ever, and there are many reasons to be optimistic about the company and its stock ahead of its upcoming second-quarter report.

Amazon Just Had a Record-Breaking ‘Prime Day’

Amazon just wrapped up its summer “Prime Day” sale, and preliminary results show it was a resounding win. In fact, data from Adobe Analytics shows that July’s Prime Day generated a record $14.2 billion in online sales, up 11% from last summer’s event and surpassing Wall Street analysts’ estimates. Adobe said the record sales were largely driven by back-to-school shopping and a “product refresh cycle” as consumers bought new electronics like tablets and TVs.

Amazon’s own forecasts predicted online sales of about $14 billion during the event, which took place July 16 and 17. Amazon issued a statement acknowledging “record sales” during this past Prime Day, but it has not yet released its final sales figures. However, Adobe noted that shoppers spent more per order during this year’s Prime Day event, with an average order value of $57.97 compared to $54.05 a year ago. Other top-selling items included household goods and clothing and shoes, Adobe Analytics said.

Amazon holds Prime Day sales events twice a year, in the summer and fall. They have become a big revenue driver for Amazon and show that the company’s core e-commerce business remains remarkably healthy.

AMZN reached a market capitalization of $2 trillion in June

In addition to its core e-commerce business, Amazon has also been showing strength in several other areas of its business, most notably its Amazon Web Services (AWS) cloud computing unit and its Amazon Prime streaming service. Amazon shares really took off after its Q1 results showed AWS recovering after companies cut spending during the pandemic. Amazon Prime has also added advertising and live sports streaming to its offerings in recent months. All of these strengths have propelled Amazon shares higher over the past year, leading to it hitting the $2 trillion market cap milestone in late June this year.

The company had a market cap of $2 trillion when its stock ended trading at $193.61 per share on June 26. While the stock price has since fallen as the sector rotated out of tech stocks, its market cap still hovers around $2 trillion. It took Amazon just four years to go from a market valuation of $1 trillion to $2 trillion.

Analysts praised Amazon’s $2 trillion market capitalization, pointing out that the company’s disciplined cost-cutting initiatives over the past two years have helped boost its profits and, in turn, its stock price.

Buy Amazon stock

AMZN stock currently has a consensus rating of “Strong Buy” among 44 Wall Street analysts who follow the company’s progress. All 44 of those ratings are “Buys,” with an average price target of 22% above the current share price. To say that Wall Street is bullish on Amazon is an understatement.

If there’s one complaint about Amazon, it’s that the company hasn’t joined other mega-cap tech companies in paying dividends to shareholders. But you never know, the company could announce a dividend with its Q2 earnings report. Regardless, Amazon stock is worth buying.

As of the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are the author’s own, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication of this article, the editor in charge did not hold (directly or indirectly) any interests in the securities referred to in this article.