Amazon stock rallied today — here's why now might be the time to buy

Could this be the start of the rebound investors have been waiting for?

| More on:
a warehouse worker wearing a face mask handles a cardboard box in an automated warehouse setting with equipment in the background.

Image source: Amazon

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened 

Shares of Amazon.com (NASDAQ: AMZN) climbed on Thursday, following bullish remarks from the e-commerce titan's leadership and better-than-expected consumer-spending figures. By close of market, Amazon's stock price was up over 4%.

So what

Like many retailers, Amazon's profits have been dented by coronavirus-related supply chain disruptions and geopolitical-driven energy price increases. Higher product, freight, and fuel costs are ongoing challenges.

At the same time, Amazon is dealing with an excess of fulfillment capacity. The e-commerce giant invested tens of billions of dollars to build warehouses and other distribution centers to meet the torrid demand from online shoppers during the early stages of the pandemic. But with e-commerce sales slowing as more people return to traditional retail stores, Amazon now finds itself with too much warehouse space.

During Amazon's shareholder meeting on Wednesday, CEO Andy Jassy acknowledged the problem and said the company was working to right-size its fulfillment network by delaying new builds and allowing some leases to expire. Jassy also said he was "quite confident" that Amazon would make use of its remaining capacity as sales grow.

Additionally, Jassy promised to return Amazon to a "healthy level of profitability" by prioritizing expense-reduction initiatives. "We have effectively lowered our cost structure before and I have high confidence that we'll get back on track as we work through these incredibly unusual past two years," he said. 

Now what

Inflation has also forced consumers to pull back on discretionary purchases. But consumer spending grew by 3.1% in the first quarter, according to a report by the U.S. Department of Commerce released on Thursday. That's up from a prior estimate of 2.7%. Stronger consumer-spending figures bode well for Amazon, which accounts for roughly half of all online retail sales in the U.S.

Moreover, if Jassy can deliver on his promise to rein in the company's costs, Amazon's profits -- and, by extension, its stock price -- could rebound faster than the market currently expects. That could lead to handsome gains for investors who buy shares today. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Joe Tenebruso has the following options: long January 2024 $2,000 calls on Amazon. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

Delighted adult man, working on a company slogan, on his laptop.
International Stock News

Prediction: This artificial intelligence (AI) stock will be worth $5 trillion in 5 years

Amazon is integrating artificial intelligence (AI) across many areas of its business.

Read more »

Robot humanoid using artificial intelligence on a laptop.
International Stock News

Google must win at artificial intelligence or its search business could crumble. Does this make Alphabet an AI stock to buy?

Here's a deeper look into how Alphabet is faring in the battle for AI supremacy.

Read more »

A delivery man wearing a cap and smiling broadly delivers two boxes stacked on top of each other at the door of a female customer whose back can be seen at the edge of a doorway.
International Stock News

2 "Magnificent Seven" stocks billionaires are buying

The Magnificent Seven includes some of the most profitable and dominant tech companies in the world.

Read more »

Happy man working on his laptop.
International Stock News

Prediction: This artificial intelligence (AI) stock will be the biggest winner of 2025

Artificial intelligence will be one of the biggest growth opportunities this century.

Read more »

Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett
International Stock News

Could Warren Buffett's last move as Berkshire Hathaway CEO be buying this beaten-down "Magnificent Seven" stock?

Buffett is a value investor at his core, and he doesn't often buy shares of expensive companies.

Read more »

A woman holds a soldering tool as she sits in front of a computer screen while working on the manufacturing of technology equipment in a laboratory environment.
International Stock News

Prediction: This artificial intelligence (AI) stock will be worth $5 trillion in 3 years

Let's take a closer look at the catalysts that could propel this stock toward that valuation.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
International Stock News

This Artificial Intelligence (AI) chipmaker just got a game-changing boost from Amazon, and Nvidia investors should be paying close attention

Amazon just made a notable investment in Nvidia's top rival.

Read more »

Happy man working on his laptop.
International Stock News

A once-in-a-decade opportunity: Here's why I'm buying Alphabet stock like there's no tomorrow

Alphabet's stock rarely gets this cheap, and right now could be a once-in-a-decade opportunity to scoop up shares at a…

Read more »