Amazon.com (NASDAQ:AMZN) shares advanced 4.3% during the four-day trading week ending July 2, comfortably surpassing the Nasdaq Composite's 2.1% gain. The stock closed at $242.67 on Thursday, up from $232.69 on June 26, marking a $9.98 increase. The broader market also saw gains, with the S&P 500 rising 1.8% and the Dow Jones Industrial Average adding approximately 2%. U.S. markets were closed on Friday in observance of Independence Day.
The bulk of Amazon's weekly gain occurred on Monday, when the stock surged $7.45, accounting for roughly 75% of the total weekly advance. The stock reached an intraday high of $249.71 on Monday but closed the week 2.8% below that peak. Trading volume declined steadily throughout the week, from 77.62 million shares on Monday to 48.30 million on Thursday, falling below the 65-day average of 50.67 million shares.
Prime Day and AWS Drive Sentiment
Two key factors fueled the week's rally. First, Amazon's Prime Day event, held from June 23-26, generated over $26.4 billion in U.S. online spending, a 9.3% year-over-year increase, according to Adobe Analytics. However, data from Numerator indicated that the average order size fell to $47.66 from $53.34, suggesting consumers are becoming more price-sensitive. Sonia Lapinsky, managing director of retail at Alix Partners, noted that while demand was strong, it was largely driven by discounts, pointing to a fatigued consumer.
Second, Amazon Web Services (AWS) raised prices for EC2 Capacity Block reservations for machine-learning GPUs by approximately 20%, effective July, as reported by Business Insider. AWS stated that it regularly reviews reservation prices based on supply and demand. Peter Berezin, chief economist at BCA Research, commented that limited GPU supply is enhancing hyperscalers' pricing power, as demand for compute continues to outstrip available supply.
Financial Health and Market Position
Amazon's first-quarter free cash flow fell to $1.2 billion over the past year, primarily due to a $59.3 billion year-over-year increase in property and equipment purchases related to AI investments. This metric is critical for shareholders, as it reflects the company's ability to manage capital expenditures. CEO Andy Jassy reported in April that AWS revenue grew 28%, its fastest pace in 15 quarters, and that Amazon's chips unit had achieved a $20 billion annual revenue run rate. Despite the recent bounce, shares remain 12.9% below their 52-week high of $278.56 set on May 5.
Wall Street maintains a bullish outlook on Amazon. According to Benzinga, Wells Fargo reaffirmed its Overweight rating on July 2, raising its price target to $313 from $312. FactSet data shows a consensus rating of Buy, with 57 Buys, 11 Overweights, two Holds, and no Sells. The average price target stands at $317.30, approximately 31% above Thursday's closing price.
Outlook and Key Levels
Amazon has few scheduled events in the coming week. The Wall Street Journal reports that the company's Q2 earnings are expected on July 30, with current estimates at $1.81 per share. Traders will be watching for any pickup in trading volume above Thursday's 48.30 million shares, and whether the stock can reclaim Monday's high of $249.71. The combination of Prime Day spending data and AWS pricing power will be closely monitored as potential catalysts for further upside.
