Amazon Breaks Out to New Highs on Strong Earnings

Amazon's stock has broken out to new highs after its latest quarterly earnings report. The e-commerce and cloud-computing giant saw AWS growth accelerate sharply, margins expand, and Amazon disclosed that its custom AI chip business has reached a $25 billion annualized revenue run rate.

The company also reported strong advertising growth and continued aggressive investment in AI infrastructure. Importantly, the results provided evidence that hyperscaler AI spending can generate substantial returns, shifting the narrative around AI capex from cost to monetization and earnings growth.

Wall Street responded quickly, with analysts revising their earnings estimates higher over the past week. The Zacks Consensus Estimate for next year has jumped 47.6% to $13.06 per share. Based on this outlook, Amazon now trades at just 20.8x forward earnings, a compelling valuation given its growth profile and improving profitability.

Sales are expected to increase 15.7% this year and another 14% next year, while EPS are projected to grow 18.7% annually over the long term. Amazon's stock has surged nearly 25% in the days following earnings, pushing it to new record highs. A decisive breakout above $280 could signal the start of another leg higher.