What Happened?
Shares of cloud computing and online retail behemoth Amazon (NASDAQ: AMZN) jumped 3.5% in the afternoon session after Meta struck a multi-billion dollar deal with its Amazon Web Services (AWS) division and multiple analysts raised their price targets on the stock.
The agreement involved Meta using Amazon's Graviton chips to power its next-generation artificial intelligence systems. This deal was reportedly worth billions of dollars and positioned Meta as one of the largest customers for Amazon's custom processors, signaling strong demand for AWS's AI infrastructure.
Adding to the positive sentiment, several investment firms expressed confidence ahead of the company's first-quarter earnings report. Analysts at BMO, UBS, and Oppenheimer all increased their price targets for the stock. They cited an improving outlook for the AWS cloud computing segment, which they expected to see accelerating growth driven by high demand for AI.
The shares closed the day at $263.95, up 3.5% from previous close.
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What Is The Market Telling Us
Amazon’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 10 days ago when the stock gained 3.6% on the news that the company announced it agreed to acquire satellite service provider Globalstar.
The acquisition, valued at approximately $11.6 billion, was intended to enable Amazon's low Earth orbit satellite network, Amazon Leo, to add direct-to-device services, extending connectivity beyond traditional cellular networks. In a related development, Amazon and Apple announced an agreement for Amazon Leo to power satellite services for iPhone and Apple Watch devices, including the Emergency SOS feature.
The news prompted bullish commentary from Citron Research, which stated the deal would help Amazon achieve "World Domination." The stock's rise also occurred as the broader market indexes opened higher amid hopes of de-escalation in the Middle East.
Amazon is up 16.7% since the beginning of the year, and at $264.31 per share, has set a new 52-week high. Investors who bought $1,000 worth of Amazon’s shares 5 years ago would now be looking at an investment worth $1,551.
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