AWS Reaccelerates: Is Amazon Still a Buy After Its 9% Post-Earnings Jump?

The most important takeaway from Amazon’s latest earnings report was not the sharp increase in reported EPS, but the combination of strong growth, expanding margins, and a rapidly growing order backlog at AWS. Second-quarter revenue reached $200.6 billion, up 20% year over year, while operating income rose 43% to $27.5 billion. AWS revenue increased 37% to $42.2 billion, marking its fastest growth rate in 18 quarters and becoming the primary catalyst behind Amazon’s nearly 9% post-earnings surge.

AWS Emerges as the Real Growth Engine

Investors had previously been concerned that Amazon was falling behind Microsoft and Google in the AI cloud race. The market was also increasingly cautious about the company’s massive capital spending and declining free cash flow. However, AWS growth significantly exceeded expectations this quarter, confirming that demand for AI computing capacity remains strong.

Amazon raised its full-year capital expenditure plan from $200 billion to $220 billion and indicated that a large portion of its future capacity has already been reserved by customers. As a result, the market has started to view these investments as demand-driven expansion backed by firm orders, rather than spending without a clear return.

The report was not entirely risk-free. Amazon’s net income received a significant boost from valuation gains related to its investment in Anthropic, meaning that reported EPS does not accurately represent the company’s normalized earnings power. Free cash flow over the past 12 months has also turned negative, which means AWS must maintain strong growth to justify Amazon’s current investment intensity and valuation.

Breakout Zone: $258–$261

From a technical perspective, Amazon closed at $235.50 before the earnings release, gaining 3.9% during the regular session, before jumping to around $258 in post-market trading.

This is not an ordinary price area. It corresponds closely to the 61.8% Fibonacci retracement level of the previous decline, while also overlapping with the July high and a former high-volume trading zone.

Therefore, $258–$261 represents the first major resistance zone for the current rally. Only a high-volume breakout above $261, followed by a successful retest that holds above $258, would confirm that the correction since May has ended. The next upside targets would then be $267–$270, followed by the historical high zone at $274–$279.

The first support zone is located at $252–$255. This area represents the short-term dividing line between strength and weakness following the earnings gap and would provide a more attractive level for a potential pullback entry.

The second support zone is located at $246–$249, corresponding to key medium-term moving averages and a previous consolidation range. A break below $246 would suggest that the earnings-driven momentum is beginning to weaken.

The final defensive level is around $235. If the stock falls back below its pre-earnings closing price, the post-earnings gap breakout would largely be considered a failure.

From a trading perspective, existing shareholders may continue holding their positions, while considering partial profit-taking if the stock is rejected from the $258–$261 resistance zone. Investors without a position should avoid chasing an aggressive opening rally. A more favorable approach would be to wait for a confirmed pullback and stabilization around $252–$255, or to follow the trend only after the stock decisively breaks above $261.

Overall, Amazon’s rally is supported by genuine fundamental improvement, but the stock has already entered a major technical resistance zone. Above $261, the trend shifts toward a confirmed reversal; $252–$255 is the key pullback zone, while a break below $246 would call for greater caution.