Amazon Jumps 25% in a Month—Why the Rally May Have More Room to Run
Amazon shares have come back to life.
After spending months in a choppier range, Amazon.com has rallied roughly 25% over the last month, helped by stronger-than-expected first-quarter results, accelerating Amazon Web Services (AWS) growth, and renewed investor focus on the company’s role in the AI infrastructure buildout.
That move has already pushed the stock higher, but the setup may not be exhausted. Sigmanomics forecasts are currently bullish across the 7-day, 14-day, and 28-day timeframes, suggesting the recent momentum may still have room to extend if the stock can hold its current technical footing.
Another question is whether the fundamentals support that kind of follow-through. In Amazon’s case, the answer is becoming more interesting because the story is no longer just about e-commerce scale or cloud leadership. It is increasingly about whether AWS, advertising, and Amazon’s own AI chip ecosystem can support a new phase of earnings growth.
Sigmanomics
What Amazon Does—and Why Recent Developments Matter
Amazon is one of the most important technology and consumer platforms in the world, but the investment case has become more layered over time.
The company still starts with its retail ecosystem. Amazon’s online stores, third-party seller services, Prime membership model, logistics network, and marketplace infrastructure give it enormous scale in global e-commerce. That scale matters because it creates traffic, data, fulfillment advantages, and advertising inventory that few companies can match.
But the higher-margin parts of the business are increasingly driving the market narrative.
AWS remains a critical piece of the long-term profit story. It is one of the world’s leading cloud infrastructure platforms, serving enterprises that need compute, storage, security, data tools, and AI infrastructure. As companies shift more workloads into the cloud and increase spending on artificial intelligence, AWS is becoming increasingly important to Amazon’s growth profile.
That is especially important now because Amazon is trying to prove that its heavy AI investment can generate tangible returns. The company has signed major AI-related agreements with OpenAI, Anthropic, Meta, and other large customers, while also leaning into its own custom silicon strategy. Amazon’s Trainium chips are designed to give AWS customers a lower-cost, high-performance alternative for AI training and inference, while reducing dependence on outside chip suppliers.
That chip business may still be underappreciated. Management has highlighted large multiyear Trainium commitments, including more than $225 billion tied to Trainium demand. The broader custom silicon effort, including Trainium, Graviton, and Nitro, gives Amazon another lever inside AWS, one that could help improve performance, lower customer costs, and strengthen AWS’s competitive position in AI workloads.
Advertising is another major piece of the story. Amazon’s ad business benefits directly from the company’s retail platform because advertisers can reach customers close to the point of purchase. That gives Amazon a powerful position in digital advertising, especially as brands look for measurable returns on spending. Unlike traditional display advertising, Amazon’s ad business sits closer to the point of purchase, giving it strategic value and the potential for high-margin growth.
Taken together, the recent developments point to a company with several growth engines revving up at the same time: retail scale, AWS, AI infrastructure, custom chips, advertising, Project Kuiper, and potential satellite connectivity exposure through the planned Globalstar acquisition. That does not erase execution risk, especially with capital spending still elevated. But it does make the Amazon story feel less like a mature mega-cap grinding forward and more like a dominant platform entering another expansion cycle.
Latest Earnings Report Reinforces the Bullish Case
Amazon’s first-quarter results gave investors a compelling reason to re-engage with the stock.
The company reported earnings per share of $2.78, well above expectations of $1.64, while revenue came in at $181.52 billion versus estimates of $177.30 billion. That was not just a modest beat. It was a broad-based quarter that showed strength across several of Amazon’s most important businesses.
AWS revenue increased 28% year over year to $37.59 billion, ahead of expectations and marking the cloud segment’s fastest growth in more than three years. That acceleration matters because AWS is the company’s largest operating profit driver, and stronger cloud growth helps support the case that AI demand is translating into real revenue.
Advertising revenue also came in ahead of expectations, rising 24% year over year to $17.24 billion. That continued strength reinforces the idea that Amazon’s ad business remains one of the company’s most attractive margin drivers, particularly as sponsored listings and retail media continue to gain share.
The retail business also performed well. Online store revenue grew 12% to $64.3 billion, above analyst estimates. That suggests the core consumer platform remains healthy, even as investors focus more heavily on AWS and AI.
The main concern remains capital intensity. Amazon’s property and equipment spending reached $44.2 billion in the quarter, while trailing 12-month free cash flow fell sharply to $1.2 billion. That decline reflects the scale of Amazon’s AI infrastructure spending, as well as investment in its satellite business.
That is the key tension in the stock. Amazon is generating strong operating momentum, but it is also spending aggressively to support future growth. For now, investors appear more willing to tolerate that spending because AWS growth is accelerating, AI demand is building, and the company’s long-term earnings power appears to be improving.
Valuation Looks Elevated, But the Setup Still Leans Bullish
Amazon is not necessarily a “cheap” stock on traditional valuation metrics. The shares trade around 32x trailing GAAP earnings, compared with a sector average near 20. The price-to-sales ratio sits around 3.9x, well above the sector average near 0.9. Price-to-book is also elevated at roughly 6.5x, compared with about 2.2 for the broader sector.
On the surface, that makes the valuation look stretched. And after a roughly 25% one-month rally, investors should be careful about assuming the stock can keep moving higher in a straight line.
But Amazon rarely screens cleanly as a value stock. The company’s valuation has to be judged against its growth profile, the profitability mix of its businesses, and the degree to which today’s capital spending could support future earnings power. AWS, advertising, and AI infrastructure are all capable of scaling into larger profit pools over time. That makes the headline multiples easier to justify than they would be for a slower-growth business.
Analyst sentiment reinforces that bullish read on valuation. Of the 58 analysts covering Amazon, 55 rate the stock a buy. With shares trading near $270, the average analyst price target near $310 implies additional upside, while higher-end targets closer to $370 suggest a more optimistic path if AWS growth, AI demand, and margin expansion continue to impress. 
Source: barchart
Sigmanomics Forecasts Add a Bullish Technical Layer
Sigmanomics data adds another layer to the Amazon setup. Across the 7-day, 14-day, and 28-day forecasts, the model currently shows a bullish bias.
The 7-day forecast points to an expected trade zone of roughly $279 to $303, with a target near the upper end of that range. With the stock recently trading around $270, Amazon sits below that zone, meaning the model would look for a move back into the range before offering a stronger short-term entry signal.
The 14-day forecast tells a similar story. It shows an expected zone of roughly $287 to $326, with a target near $326. Here again, Amazon is below the preferred entry zone, suggesting the model wants to see further confirmation before the shorter-term setup becomes more compelling.
The 28-day forecast is already more constructive. It places Amazon inside its expected zone of roughly $251 to $314, making the stock a valid long entry under that longer timeframe. The model’s target sits near $314/share, while a potential close below roughly $220/share would invalidate the setup.
Taken together, the forecast structure leans bullish, but with some nuance. The shorter-term models suggest the strongest signal would come from a move into higher expected zones, while the 28-day model already supports a valid long setup.
That lines up with the broader fundamental picture: valuation is elevated, but Amazon’s recent execution, AWS acceleration, advertising growth, AI chip momentum, and bullish analyst sentiment all support the case that the stock may deserve elevated premium multiples.
Bottom Line
Amazon’s rally may have changed the entry point, but it has also made the story harder to ignore.
The move has been backed by improving fundamentals, not just renewed enthusiasm for mega-cap tech. AWS growth is accelerating, advertising remains a powerful profit driver, and Amazon’s AI infrastructure strategy is becoming a larger part of the long-term thesis.
Sigmanomics forecasts support that constructive read, with bullish signals across the 7-day, 14-day, and 28-day timeframes. The shorter-term models suggest the setup would strengthen if the stock moves into higher expected zones, while the 28-day model already supports a valid setup over a slightly longer timeframe.
For investors and traders, the key question is whether Amazon is entering a broader rerating phase. If AI investment keeps feeding AWS growth, advertising momentum, and stronger earnings power, the recent breakout may look less like a short-term burst and more like the beginning of a larger move.
Andrew Prochnow
Options and volatility trader with more than 15 years of experience trading global financial markets, including 10 years as a professional options trader. Contributor to tastyfx, Barchart, Benzinga, New Constructs, DailyFX, and Luckbox Magazine. Covers forex, equities, options, and macro markets.
