The Stock of Amazon Resumes Its Breakout. Losing Some Ups Deliveries Won’t Stop It.

Concerns over Amazon.com Inc.’s ability to maintain its delivery operations following United Parcel Service Inc.’s decision to slash its shipments for the e-commerce giant by more than half seem to have little impact on investor sentiment.

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Amazon’s stock surged 1.3% on Friday, closing at $237.68. During the session, it hit an intraday peak of $240.29, surpassing its previous record close of $238.15 from Jan. 28.

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Initially, investors appeared uneasy about how UPS’s announcement would affect Amazon’s business. On Thursday, the stock dipped by 1%, even as the S&P 500 gained 0.5% and the Nasdaq-100 edged up 0.14%. However, Friday’s rally more than offset those losses, driven not just by technical market factors but also by strong fundamentals supporting Amazon’s resilience.

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From a technical perspective, many market analysts consider record highs to be bullish indicators, as they suggest there are no historical resistance levels to hinder further gains.

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Although the stock has soared 33.2% over the past five months, some traders may worry that the rally is getting overextended. However, even if an overbought condition leads to a temporary pullback, it could still be a sign of long-term strength.

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Currently, Amazon’s stock is not showing signs of being overbought. In mid-December, the stock hit fresh highs but only experienced a mild retracement before rebounding to record levels.

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Another positive technical signal is that Amazon’s stock remains well above its key moving averages. On Friday, the 50-day moving average—used to track short-term trends—stood at $221.88, while the 200-day moving average—a key indicator of long-term momentum—was at $194.40. Both of these levels are rising, reinforcing the stock’s strong upward trajectory.

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In this bullish environment, these moving averages often act as support levels, presenting buying opportunities when the stock dips.

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Oppenheimer technical analyst Ari Wald views $220, the level of the 50-day moving average, as a near-term support level and sees little resistance ahead.

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Wald also believes that recent trading patterns confirm a resumption of Amazon’s “multi-year breakout” rally, which could push the stock even higher. With back-to-back record weekly closes, he expects Amazon’s stock to continue recovering from the relative underperformance it experienced between 2020 and 2023.Amazon’s Business Model Remains Strong

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Even if UPS reducing its deliveries does have some effect, it’s unlikely to be a lasting issue for Amazon. A similar situation occurred in 2019 when FedEx Corp. ended its air and ground shipping agreements with Amazon. Despite that change, Amazon continued to see growth in revenue, profits, and unit sales, and its stock remained strong.

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While UPS has framed the decision as a cost-cutting move, Amazon also incurs significant expenses in maintaining partnerships with third-party shippers. This is one of

the reasons the company has heavily invested in its own logistics and delivery infrastructure.

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According to TD Cowen analyst John Blackledge, Amazon has poured over $160 billion into its global fulfillment, logistics, and transportation network since 2020 to support its expanding e-commerce business. As a result, Amazon has more than doubled the size of its fulfillment network in that period.

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This substantial investment means that Amazon is well-positioned to maintain its focus on delivery speed, even as it reduces reliance on outside carriers.

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Baird analyst Colin Sebastian estimates that Amazon already handles about 70% of its domestic deliveries in-house. Increasing this share is a key part of Amazon’s strategy to lower unit costs.

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Sebastian views the reduction in UPS’s role as a natural shift in the companies’ relationship. As Amazon continues expanding its lower-cost regional fulfillment network and same-day delivery hubs, it can allocate more shipments to its affiliated drivers rather than third-party carriers.

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Moreover, UPS’s decision does not mean Amazon will lose all of its deliveries from the company—just the majority. Amazon also has other logistics partners it can rely on if needed.

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Amazon spokesperson Kelly Nantel reassured customers in a statement to MarketWatch, saying, “We’ll continue to partner with [UPS] and many other carriers to serve our customers.”

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Despite UPS’s decision to scale back its deliveries for Amazon, the company’s stock remains strong, reflecting confidence in its long-term growth strategy. Technical indicators suggest continued bullish momentum, while Amazon’s massive investment in its logistics network reinforces its ability to handle disruptions. With most of its deliveries already managed in-house, the company is well-prepared to navigate these changes without significant operational setbacks.

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