Analysis

Why Amazon Stock Topped the Market Today

The company has hit a major milestone.

Thursday’s trading session was a fairly sleepy one for many famous stocks; one exception was powerhouse retailer Amazon (AMZN 2.19%). The company’s stock price improved by more than 2% on the day, a much better showing than the essentially flat trajectory of the S&P 500 index. That can happen when a stock hits a major milestone.

Amazon is now a $2 trillion behemoth

That milestone in Amazon’s case is being valued at an over $2 billion market cap. The company’s stock crossed that level on Wednesday, and given the difficulty of the achievement, investors are heartened enough to keep pushing up the price.

Additionally, late on Wednesday, ever-influential Bank of America raised its price target on Amazon and reiterated its buy recommendation. It now feels the shares are worth $220 apiece, up from the previous estimation of $210. In its latest research note on the company, the bank said that Amazon still has quite a bit of scope for improving its efficiency.

It has already proven this, according to the analysis, with many items now deliverable the same day or next day to customers. Bank of America said Amazon has six potential efficiency drivers, including new consolidation centers and expanded robotics integration.

Grow or go

Although the analysis sounded a word or two of caution, it noted that Amazon’s vaunted Amazon Web Services (AWS) could suffer a slowdown (it operates in a heavily competitive field against major tech companies, after all), and ad revenue might slump.

Many investors are focusing on the bright side these days though, as evidenced by that massive market cap figure. Beware, however, as many people expect continued outperformance by such stocks.

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. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Bank of America. The Motley Fool has a disclosure policy.

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