Investing

Institutions Just Bet $2.6 Million on Amazon Upside

Ian Cooper

Published: February 5, 2025 2:44 pm

Investors should keep an eye on Amazon (NASDAQ:AMZN).

Just recently, an institution picked up $1.33 million worth of the AMZN March 21, 2025 calls. Another picked up $1.31 million worth of those same call options.

Key Points About This Article 

• An institution picked up $1.33 million worth of the AMZN March 21, 2025 calls. Another picked up $1.31 million worth of those same call options.
• Long-term, there’s a lot to like about Amazon. For one, e-commerce continues to grow with Amazon now holding 40% market share.
• We also have to consider that AI cloud computing could be a $2 trillion market by 2030, according to Goldman Sachs. All of which would be beneficial for Amazon.
• If you’re looking for more stock ideas, don’t forget to grab a copy of our “The Next NVIDIA” report that’s free. It details the war between NVIDIA and one stock that rose 114% in 2024. The report is loaded with research on top AI stocks and is available complimentary for a limited time.

All ahead of the company’s earnings release on February 6.

While we’d recommend going long Amazon here, earnings are always a tricky bet. Plus, the underlying AMZN stock has become overbought at $240 with over-extensions on relative strength (RSI), MACD and Williams’ %R. So, we’d suggest sitting on the sidelines with Amazon until it sees a healthy pullback.

Amazon Crushed Third Quarter Numbers

While we wait for its latest earnings report, let’s take a quick look at the third quarter.

Amazon’s EPS OF $1.43 beat by 29 cents. Revenue of $158.88 billion, up 11% year over year, beat by $1.6 billion. AWS segment sales jumped 19% year over year to $27.5 billion. Operating cash flow increased 57% to $112.7 billion from $71.7 billion year over year. And its free cash flow of $47.7 billion soared from $21.4 billion a year earlier.

Moving forward, the company’s net sales are expected to come in between $181.5 billion and $188.5 billion, as compared to estimates of $188.26 billion. Operating income is expected to come in between $16 billion and $20 billion, as compared to estimates for $13.2 billion.

Analysts expect Amazon to have earned $1.48 a share in the fourth quarter, which would be about 48% year-over-year growth. Revenue is expected to land at $187.3 billion, which would be 10% year over year.

But Wait, There’s More… 

Long-term, there’s a lot to like about Amazon.

For one, e-commerce continues to grow with Amazon now holding 40% market share. That’s massive when you compare it to Walmart’s (NYSE:WMT) 7%. Two, Statista says that the U.S. e-commerce market could be worth about $1.9 trillion in the coming years.

Three, ad revenue is also on the run. In its third quarter, the company’s ad revenue jumped 19% to $14.3 billion.  It’s even grabbing a bigger piece of the U.S. digital ad market. eMarketer, for example, says ad sales could reach $95 billion.

We also have to consider that AI cloud computing has big potential. Amazon holds a 31% market share. Alphabet’s (NASDAQ:GOOG) Google has 12%. Plus, companies are spending more on the AI cloud, with Goldman Sachs estimating that global computing sales will reach $2 trillion by 2030.

Again, there’s plenty to like about Amazon in the long term.

Short-term, we would wait for the AMZN stock to pull back from overbought conditions.