What's Going On With Amazon Stock Tuesday?

Amazon.Com, Inc AMZN shares are trading higher Tuesday as it kicked off its Prime Day extravaganza offering deeper discounts on a wide range of goods and services, including its first-ever travel discounts.

JMP Securities analyst Nicholas Jones reiterates Amazon.com with a Market Outperform and a $140 price target.

As growth has decelerated for five consecutive quarters, AWS top-line trends and profitability performance will be key focus areas. 

With consumer confidence remaining depressed, retail sales' sluggish growth, and recession fears, the development and profitability of AMZN's retail business will be in focus for investors. 

Further, investors are likely to look for an indication that AMZN's Prime Day event helped drive 3P sales and alleviated slack in its fulfillment network.

YTD, almost all the e-commerce stocks in Jones' coverage have underperformed the broader market, with AMZN and Farfetch Limited FTCH being the exceptions. 

The analyst is not surprised by the recent performance, given that retail sales growth continues to be pressured and consumer confidence remains materially below pre-pandemic levels. 

E-commerce appears more favorable, relative to broader retail, and is reverting to pre-pandemic growth trends. 

While retail sales growth is muted, e-commerce upper funnel trends have been mainly stagnant to improving, though somewhat category dependent. 

AMZN continues demonstrating relative resilience, which Jones attributes to its exposure to consumer staples and strong app engagement. Additionally, its increased focus on AI and LLMs should help offset ongoing softness in AWS. 

Price Action: AMZN shares traded higher by 1.47% at $128.95 on the last check Tuesday.

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