AMZN Options: Riding the Bullish Wave with Amazon?

Amazon.com aims to be Earth's most customer-centric company, operating through three segments: North America, International, and 'Amazon Web Services' ('AWS'). It serves consumers through online and physical stores, offering a wide selection of products and subscription services like 'Amazon Prime'. Amazon also provides programs for sellers to grow their businesses and reach customers through 'Amazon's' platform. 'AWS' caters to developers and enterprises with on-demand technology services such as compute, storage, and database solutions. Furthermore, Amazon supports content creators and provides advertising services to various businesses. The company differentiates itself by focusing on selection, price, and convenience for consumers, and the quality, speed, and reliability of its services for sellers and enterprises.

The short-term outlook for AMZN is positive. Several news items point toward growth in Amazon's cloud services, particularly AWS, and its AI infrastructure. Cipher Mining's $5.5 billion data center deal with AWS is a strong indicator of increased demand for Amazon's cloud services and signals confidence in AWS's long-term prospects. Verizon building a new fiber network for Amazon's expanding AI data centers further reinforces this positive trend. The partnership between Verizon and Amazon to combine 5G with AWS cloud services suggests further expansion and scaling of AI applications, which should drive revenue growth. While the news about Anthropic landing Cognizant as an AI customer isn't directly about Amazon, it highlights the broader positive trend in the AI space, indirectly benefiting AWS. Overall, the news flow suggests strong growth in Amazon's key segments. The CNN Money Fear and Greed index being in 'Fear' could limit upside, but the underlying business news is too strong to ignore.

AMZN's technical indicators present a mildly bearish outlook for the next 1-3 months. The recent price action reveals a significant drop from a high of $258.60 on November 3rd to a close of $249.39 on November 4th. The stock is currently trading below its 21-day EMA of $227.34 and 50-day SMA of $226.01, signaling short-term weakness. The MACD at 4.22 is well above its signal line of 0.74, but is expected to decline, which would confirm the bearish trend. The RSI of 71.70 suggests overbought conditions, indicating a potential pullback or consolidation. While the 200-day SMA is $214.63, the price has been above it, but the recent drop suggests a potential test of this level. The stochastic oscillator shows the %K line at 76.25, which is a sharp decrease from the previous overbought condition, indicating downward momentum. Overall, the combination of recent price declines, negative momentum signals from MACD and RSI, and the price trading below key moving averages suggests a bearish outlook for AMZN in the short to medium term.

Amazon's MD&A presents a generally positive but nuanced picture. `Net Sales` for Q3 2025 increased by 13% year-over-year to $180.169 billion, with North America up 11%, International up 14%, and AWS up 20%. The growth reflects increased unit sales, advertising, and subscription services. However, the FTC lawsuit settlement and severance costs impacted profitability. Operating income remained relatively flat at $17.422 billion compared to $17.411 billion in Q3 2024, including charges of '$2.5 billion related to the settlement of a lawsuit with the FTC and $1.8 billion of estimated severance costs'. The nine-month figures show stronger growth, with operating income rising from $47.390 billion to $54.998 billion. `Net cash provided by operating activities` for the nine months ended September 30, 2025, was $85.055 billion, up from $70.241 billion in the prior year. Free cash flow decreased significantly to $14.788 billion from $47.747 billion, driven by increased capital expenditures, primarily for technology infrastructure supporting AWS and fulfillment network expansion. Q4 2025 guidance projects net sales between $206.0 billion and $213.0 billion, representing 10-13% growth, and operating income between $21.0 billion and $26.0 billion, compared to $21.2 billion in Q4 2024. Macroeconomic factors and geopolitical conditions are cited as potential risks.

Amazon's Q2 2025 earnings call strikes a moderately bullish tone, highlighting revenue growth and operational efficiencies. The company reported revenue of $167.7 billion, a 12% increase year-over-year excluding foreign exchange, and operating income of $19.2 billion, up 31% year-over-year. CEO Andy Jassy emphasized the importance of 'inputs' like selection, low prices, and delivery speed, noting the successful return of Nike products and expansion of perishables offerings. Prime Day was also a record-breaking event. CFO Brian Olsavsky pointed to a 22% year-over-year growth in advertising revenue and an AWS annualized revenue run rate exceeding $123 billion. While AWS margins saw a decline due to seasonal compensation and depreciation, the company is heavily investing in AI infrastructure. Looking ahead, Q3 net sales are projected between $174 billion and $179.5 billion, with operating income between $15.5 billion and $20.5 billion. Despite uncertainties surrounding tariffs, management expressed cautious optimism, stating they 'feel really good about the key inputs we control price selection and convenience.'

Amazon's financial performance over the last several quarters indicates a positive trajectory. Revenue has steadily increased from $143.313B in Q1 2024 to $180.169B in Q3 2025, demonstrating consistent growth. Profitability, as measured by grossProfitRatio, has fluctuated but generally remained around 50%, ending at 0.5078 in the most recent quarter. Operating cash flow has been consistently strong, with $35.525B generated in Q3 2025, indicating healthy cash generation capabilities. Total debt has remained relatively stable, fluctuating between $130.900B in Q4 2024 and $135.419B in Q3 2025, suggesting prudent debt management. Overall, Amazon's financials reflect robust revenue growth, solid profitability, strong cash flow, and stable debt levels, painting a picture of financial health and positive momentum.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting effective cost management. Return on Equity (ROE) has improved, showcasing efficient capital allocation. While the Price-to-Earnings (P/E) ratio is elevated, it is potentially justified by the company's growth prospects. The Debt-to-Equity ratio has decreased, reflecting a healthier balance sheet and reduced financial risk. The current ratio is at a healthy level, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable combination of growth, profitability, and balance sheet strength, supporting a positive outlook for the next 12 months, although the high P/E ratio warrants close monitoring.