Amazon.com Inc. (NASDAQ: AMZN) stock is currently down about 20% from its all-time high in February, placing it in bear market territory. While some of this decline is tied to the broader market’s downturn, the drop seems increasingly irrational given the company’s record-breaking earnings and continued long-term growth.
The stock is now back to levels seen last summer and not far above where it traded in 2021. However, just as the S&P 500 appears to have stabilized in recent sessions, so has Amazon.
The stock has held firm above its two-week low, suggesting that sellers may be starting to run out of momentum. This and the fact that the broader market moved higher after yesterday’s much-anticipated update from the Fed suggests a turnaround has started.
Earnings Continue to Set Records
Focusing on Amazon’s strengths first, its latest earnings report from early February was nothing short of spectacular. The company smashed analyst expectations on both headline numbers, delivering both its highest-ever revenue print and most profitable quarter in history. The report also saw its quarterly profit surpass $20 billion for the first time ever, with that figure now up more than 80% year-over-year.
This wasn’t just a one-off result. Amazon has now beaten expectations for multiple consecutive quarters, showing resilience even as macroeconomic pressures have weighed on other tech giants.
This strong performance was driven by continued strength in AWS, its high-margin cloud computing business, and a booming digital advertising segment, which are both seen as core revenue drivers that are going nowhere. Despite economic uncertainties, Amazon has continued expanding its business lines, improving its margins, and growing its market share.
Wall Street Is Still Bullish on Amazon
It’s no surprise that analysts continue to see Amazon as one of the strongest players in mega-cap tech despite the recent pullback in shares. Several major firms, including Citigroup, Canaccord Genuity Group, and Loop Capital, have reiterated Buy ratings in recent weeks.
Loop Capital, in particular, sees substantial upside with its $285 price target. From where Amazon closed on Wednesday night, that implies a nearly 50% upside. For a $2 trillion tech giant, that kind of potential is rare, highlighting the disconnect between the stock’s current price and its longer-term growth trajectory.
One key reason for analysts’ confidence is Amazon’s ability to capitalize on AI and cloud computing growth. The company has continued to enhance AWS’s AI-driven infrastructure, positioning itself as a critical player in enterprise cloud computing.
Additionally, Amazon’s Prime ecosystem remains a dominant force in e-commerce, giving the company a recurring revenue stream that has helped drive profits even as retail margins tighten.
Technical Indicators Suggest the Worst May Be Over
The technical setup also suggests now is a great time to consider an entry. Amazon’s relative strength index (RSI) recently dipped as low as 26, signaling extreme oversold conditions. While it has since rebounded somewhat, currently sitting at 36, this still suggests the stock is oversold and has only just started its bounce back.
Simultaneously, the MACD is on the verge of a bullish crossover, a well-regarded technical indicator that often suggests a shift in momentum is starting to take place. If the broader market can continue to stabilize over the coming sessions, these indicators suggest that Amazon may soon see its stock bought up as one of the more attractive stocks out there.
Investors watching for a technical setup that supports a bounce should keep an eye on whether Amazon continues to hold above recent support levels. If buyers step in at these prices, the upward momentum should gather some pace.
Why This Could Be the Best Time to Buy Amazon Stock in Years
Amazon’s stock has been hit hard, but the underlying business remains as strong as ever. The company continues to post record revenue and is almost universally well-regarded by Wall Street.
With the stock trading down 20% despite the company posting record quarterly numbers, this is starting to look like one of the best entry points in years.
The stock market cycle I’ve used to identify the most likely day of the next market crash is the exact same indicator that helped me call the bear market of 2018… the bull market in 2020… the bear market in 2022… the roaring bull markets in 2023 and 2024… and more. I’m convinced it has helped me identify the next big crash too. We are at an important juncture in the markets. Knowing what to do in the months to come is critical.
Five Below’s (NASDAQ: FIVE) stock price struggled in recent quarters as consumer headwinds and competition cut into the growth outlook.
However, those days are behind it as the influence of new CEO Winnie Park begins to show.
The takeaway in late March is that this company is on track to sustain double-digit growth, is working to improve traffic and margin, and has plans to increase its leverage with an accelerating store.
Here’s a look at five reasons why its stock price will increase in Q2 2025 and possibly gain 100% by the year’s end.
1. Business Is Good for Five Below Despite the Headwinds
Five Below’s business is good despite the headwinds and growth outlook reduction they caused. The Q4 2024 results show this company growing by 3.7% despite the tough comp versus a 13-week quarter. The only bad news is that the growth was as expected, albeit industry-leading at 7.8% adjusted. That compares well to low-price competitors like Target (NYSE: TGT) and TJX Companies (NYSE: TJX), which contracted during the quarter and Walmart (NYSE: WMT), which grew by only 5%.
More importantly, the company’s experience margin pressures but far less than forecasted by the analysts tracked by MarketBeat. The net result is that adjusted operating and net income fell by 1.5% and 0.7%, respectively, leaving adjusted EPS down about 0.6% year-over-year (YOY) but 320 basis points above the consensus versus the as-expected top-line figure.
2. Five Below Builds Leverage With Accelerating Store Count
Five Below’s results are mixed with a negative store comp offset by a rising store count. The comp fell by 3% due to competition, rising prices, and consumer pull-back but was offset by a 14.7% increase in year-end store count. The salient detail is that store growth offsets consumer weakness and builds leverage for the consumer rebound, which may begin for retailers as early as the 2nd half.
Many analysts believe that tariff-induced headwinds will ease by then, aligning with the outlook for their “transitory” impact on inflation as proclaimed by the FOMC. Looking ahead, the company plans to accelerate new store openings, including the addition of 50 in FQ1.
3. Guidance Is Sufficient to Sustain the Fortress Balance Sheet
Five Below’s guidance was as mixed as the Q4 results. However, the EPS target is below forecasts and not above, which could impact the share price if not for the cash flow and balance sheet outlook. The company may not produce the earnings quality forecasted by optimistic analysts but will produce sufficient cash flow to sustain its growth plans and fortress balance sheet.
The company targets $4.26 billion in annual revenue, aligning with analysts’ forecasts, suitable for a 10.1% YOY increase and likely a cautious target. Among the opportunities for Five Below is to fill a void left by Big Lots bankruptcy.
4. Five Below Has a Solid Gold Balance Sheet
Five Below has a fortress balance sheet that sustains the company’s business plans while it returns capital to shareholders and improves shareholder value.
Highlights at the end of 2024 include increased cash, current, and total assets partially offset by increased liability and virtually no long-term debt. Shareholder equity increased by 14%, while the share count fell by 0.8%. The share count isn’t falling aggressively but is declining annually and is a bullish force for the market.
5. Five Below Trades at a Deep Discount to Peers
Five Below’s stock price decline realigned it with a more attractive valuation.
Trading at only 15x earnings in 2025, the company is significantly undervalued compared to peers and expected to grow at a double-digit pace starting in 2027.
In this scenario, the stock falls below 10x by 2030, suggesting its price could rise by 100% to 200% by then.
As it is, analysts expect only a 30% upside at the consensus, and the revision trends suggest that less is probable.
Regarding the institutions, they are taking advantage of Five Below’s deeply discounted price and bought at a nearly 2-to-1 pace versus sellers in Q1.
You may already sense that the tide is turning against Elon Musk and DOGE. Just this week, President Trump promised to buy a Tesla to help support Musk in the face of a boycott against his company. But according to one research group, with connections to the Pentagon and the U.S. government, Elon’s preparing to strike back in a much bigger way in the days ahead.
This was a bit of a shockwave that sent fears through those bullish on the AI revolution. Demonstrating the similarities in their business, Marvell’s results also dragged down Broadcom shares by 6%.
Broadcom’s earnings just one day later elicited a much more positive reaction. Shares popped over 8%, assuaging some of the concerns brought on by Marvell.
What explains these drastically different results, and why is Broadcom still a strong AI investment? This analysis will compare both companies’ results and highlight key management insights.
Earnings Comparison: Broadcom Beating Expectations and Growing Its Pipeline
For Marvell, its earnings were by no means bad. The company very slightly beat estimates on revenues, adjusted earnings per share (EPS), and next quarter guidance for both figures. However, Broadcom shined in comparison. The company beat estimates on revenue and adjusted EPS by over 2% and 6%, respectively. Its revenue guidance for next quarter was $190 million higher than forecasted, a beat of over 1%. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance came in higher than expected by a similar dollar figure. It was 2% higher than forecasted.
Overall, these figures might not seem like massive beats, but they were enough to get markets excited enough to increase the company’s valuation substantially. Many strongly performing tech stocks have needed to significantly beat estimates and raise guidance to keep shares from falling. This was particularly true for Broadcom and Marvell this quarter. Markets hoped recent announcements of hyperscaler firms investing hundreds of billions in AI infrastructure would lead to significant guidance beats.
Broadcom may be the company that is capitalizing on this hope. Aside from the beat and raise, it provided interesting commentary that excited investors. Management mentioned that it is working with two new hyperscaler customers to make custom AI accelerator chips, in addition to two other hyperscalers that it previously revealed it is working with. This was a particularly encouraging sign, showing that Broadcom is continuing to grow its pipeline of deals. Marvell did not provide similar commentary. Overall, investors should view this as a strong sign for Broadcom’s future.
VMware: Broadcom’s Ace Up Its Sleeve
One big advantage Broadcom has over Marvell in terms of investing in AI is its software. The company’s acquisition of VMware has been extremely successful. Broadcom has massively decreased its headcount at VMware and shifted many customers to a recurring subscription model as opposed to lifetime licenses.
Additionally, the company is improving VMware’s previous products and expanding the capabilities of VMware’s key product, vSphere. vSphere is virtualization software that allows a server to split its computing resources across multiple workloads. Without virtualization software, a server would often go underutilized, as one workload would not be enough to use all of its power.
VMware has expanded this concept to the entire data center through VMware Cloud Foundation (VCF). It is also catering to large AI adopters with VMware Private AI Foundation. It adds virtualization for NVIDIA’s (NASDAQ: NVDA) graphics processing units (GPUs). This allows for the virtualization of AI workloads.
Overall, this provides a highly valuable product for large enterprises that want to run AI workloads in their private data centers. This is as opposed to running them on a public cloud like Microsoft (NASDAQ: MSFT) Azure. This private cloud method is ideal for ensuring data security. These changes have allowed Broadcom to increase VMware margins massively while impressively growing revenue. VMWare gives Broadcom two big ways to benefit from the proliferation of AI: hardware and software. For Marvell, hardware is really holding the torch.
AVGO: Still a Solid Way to Play AI
Broadcom looks poised to continue its impressive success in the AI investing landscape. The company’s strong-growing AI semiconductor and infrastructure software segments provide it with two revenue sources with significant AI tailwinds. Additionally, the company’s margins should continue to increase as software becomes a larger part of the firm’s business.
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