Shares of Amazon (NASDAQ: AMZN) higher on Tuesday, up as much as 4.5%. As of 2:10 PM ET, the stock was up 4.1%.
There were a few catalysts that sent the e-commerce titan higher. One was an optimistic take from a Wall Street analyst; the other was the unexpected profit on one of his investments.
Best choice
Analysts at bank of America Amazon remains their top pick among large-cap and FAANG stocks in 2024, according to online investment publication The Fly. The analysts maintained their buy rating on the stock and increased their price target from $210 to $220. This indicates a potential gain for investors of 18%, compared to Tuesday’s closing price.
The analysts noted that Amazon has significant potential for efficiency improvements this year. Despite the progress made in 2023, Amazon remains below 2018 levels, as measured by a number of logistics usage metrics that the investment bank tracks. While a recovery in digital retail has been the main driver so far this year, margin expansion could drive another move higher.
The other catalyst that drove Amazon higher today was the company’s investment in Rivian automotive industry (NASDAQ: RIVN). Amazon owns more than 162 million shares of Rivian, which amounts to a 16.4% stake. The electric vehicle (EV) maker has suffered from results that weren’t as good as Wall Street predicted and an overall slowdown in the EV market. As a result, Rivian stock recently fell as much as 69% from its all-time high reached late last year.
However, Rivian announced that it would form a new joint venture with Volkswagen AG, including an investment of up to $5 billion. Rivian shares jumped more than 20% higher on the news (at the time of writing), increasing the value of Amazon’s stake in the company by approximately $415 million.
Time to buy?
Amazon’s stock has been on fire and is up more than 50% in the past year. Investors are optimistic about the recovery of online retail, the company’s foray into artificial intelligence (AI) and a resurgence in cloud growth.
At less than three times forward revenue, Amazon is attractively priced, especially when considering its many growth engines.
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Bank of America is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Danny Vena has positions at Amazon. The Motley Fool has and recommends positions in Amazon and Bank of America. The Motley Fool has a disclosure policy.
Why Amazon shares skyrocketed on Wednesday was originally published by The Motley Fool
