Why Josh Brown Thinks Amazon Is Setting Up For A Breakout

Amazon.com Inc AMZN traded lower Monday amid overall market weakness stemming from increasing COVID-19 omicron variant uncertainty. Ritholtz Wealth Management CEO Josh Brown took advantage of the pullback and added to his position. 

"I think maybe for the first or second time ever, I averaged up 100% higher than my original cost basis," Brown said Tuesday on CNBC's "Fast Money Halftime Report."

What To Know: Following a massive surge in share price at the beginning of the pandemic, Amazon has been underperforming the market for about 18 months, Brown said.

He attributed some of the stock's recent underperformance to the CEO transition that took place this year and the company's failure to increase guidance.

Why It Matters: All of this has led to a massive consolidation on a technical basis that is setting up for a breakout, according to Brown.

"The stock is on the verge of a breakout," Brown said. "I think it is the best positioned of the large cap tech names for next year."

Amazon has about 40% market share in the e-commerce space and about 50% market share in the cloud and both of those businesses are growing rapidly, he said. He also pointed to the company's accelerating advertising business and physical retail, as well as its prime video platform.

"[There are] a lot of ways to win in Amazon," Brown said. "It's not traditionally cheap at 66 times earnings, but why would it be cheap? It's one of the best companies of all time and I think this is a name that's got a lot of catching up to do."

From Last Week: Is This The Top FANG Stock For 2022?

Brown also noted that if Amazon were to spin off its Amazon Web Services business or announce a stock split, he thinks the stock could increase by 10% to 20% almost immediately.

"There are a lot of potential catalysts here and even if none of those special things happen, this business is so dominant [and has] so many Prime users, I just fail to see how this one won't perform as we get into 2022."

AMZN Price Action: Amazon has traded as high as $3,773 and as low as 2,881 over a 52-week period.

The stock was up 1.12% at $3,379 at time of publication.

Photo: courtesy of Amazon.