Should You Buy Amazon Stock Before July 31?

Core Viewpoint - Amazon is facing mixed economic pressures as it prepares to report its second-quarter earnings, with potential impacts from tariffs and growth opportunities in its cloud and advertising segments [1][3]. Digital Retail Impact - Amazon's digital retail segment may be adversely affected by tariffs, particularly since approximately 62% of unit sales come from third-party merchants who source products from China. The U.S. has set tariffs on Chinese goods at a minimum of 30%, which could impact sales and profits for the second quarter [5][6]. - The company expanded its Prime Day sale to four days, which could enhance sales, but the event's impact will not be reflected in the second-quarter financials as it occurred after the quarter ended [6][7]. Cloud Segment Performance - Amazon Web Services (AWS) remains a strong performer, holding a 32% market share in cloud infrastructure services and growing 17% year over year. AWS generates 19% of Amazon's total revenue and 63% of its operating income [8][9]. - The demand for AI is driving growth in AWS, with over 1,000 generative AI services and applications in development, positioning AI as a significant growth catalyst for the cloud segment [9]. Advertising Growth - Amazon's advertising business is rapidly expanding, with ad revenue increasing by 18% year over year in Q2, driven by Amazon Prime and live sports programming [10][11]. - The company has made strategic moves to enhance its advertising capabilities, including a deal with Roku to access a large connected TV audience, which could further boost ad revenue [12]. Analyst Sentiment and Valuation - Wall Street analysts are overwhelmingly bullish on Amazon, with 94% rating the stock as a buy or strong buy. The average price target suggests an 8% upside, while Morgan Stanley has set a higher target of $300, indicating a potential 33% upside [14][15]. - Amazon's current valuation at approximately 37 times trailing-12-month earnings is considered a bargain compared to its three-year average multiple of 83, especially given its 95% stock gain over the past three years, outperforming the S&P 500 [17].