2 Ways to Trade Amazon Ahead of Earnings

Shares of tech giant Amazon.com Inc. (NASDAQ: AMZN) have been trading just above $230 the week of Jan. 20 as the company gears up for its first earnings report of the year, due in early February. Technically, the stock remains in an uptrend, supported by a clear run of higher lows, but it is also starting to look uncomfortably flat. 

Amazon has struggled for weeks now to push through the record high it set in November, and that hesitation has left the stock in limbo at a time when the broader market has been pushing on to fresh highs. 

That level of divergence, rare for Amazon, makes this upcoming report all the more important. On the one hand, Amazon has a long list of positives working in its favor.

On the other hand, however, it finished 2025 essentially flat and has failed to hit the ground running so far in 2026. 

With geopolitical tensions rattling markets, this earnings report feels less like a routine update and more like a chance for Amazon to shake off its slumber and reassert the longer-term uptrend. Let's take a closer look at the setup and how investors might want to play it. 

Framing the Setup

Looking at the chart, the setup is pretty straightforward. Having retreated from the high it tagged in early November, Amazon needs to re-ignite momentum pretty quickly. If it doesn't, the stock will likely start drifting lower. 

That said, the fact that Amazon has continued to hold its higher-low structure is encouraging. That underlying support suggests buyers are still stepping in on weakness. However, trends cannot survive indefinitely without progress, and at some point, the stock needs to prove it can set a new high to justify continued optimism.

The burden of proof currently sits with the bulls, and a strong earnings report would go a long way toward shaking the stock from its slumber. As we'll see below, expectations are high that this will happen and that 2026 will be a solid year for Amazon.

Option #1: Back the Catch-Up Trade

Starting with the more aggressive approach, investors who believe Amazon is unfairly priced by the market could consider buying ahead of earnings. The premise here would be that a solid earnings report would set the stock up for a catch-up play. After underperforming in 2025 while the broader market rallied to high after high, a bullish report could open the door to a sharp rally. 

Analyst support, both that from last quarter and in 2026 so far, reinforces that view.

Recent reiterations and upgrades, such as those from Scotiabank and New Street Research, have come with price targets ranging from the mid-$260s to $350, making it difficult to argue that AMZN is not massively undervalued right now.

Even in the face of rising geopolitical risk, the likes of Wedbush are continuing to argue that large-cap tech, including Amazon, remains one of the most attractive places to be. For investors willing to accept the volatility that can precede and follow earnings, this approach is about positioning early and trusting the longer-term story.

Option #2: Wait for Confirmation

The more cautious strategy is to stay on the sidelines until earnings remove some of the uncertainty. Having traded sideways for so long, Amazon has eroded some of the trust it had built over the past few years, and there is a legitimate argument that the stock needs to prove growth has not stalled before it can go higher.

This approach also accounts for macro risk. With markets sensitive to current geopolitical headlines, even a decent earnings report could be met with a muted reaction if it doesn't check every box on the bull's list. Waiting allows investors to avoid a potential sell-the-news reaction and enter once the direction is clearer.

The trade-off, of course, is that clarity and comfort often come at a higher price, literally. If Amazon makes a sharp move back towards the $260 level on strong numbers, latecomers may be forced to chase.

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The article "2 Ways to Trade Amazon Ahead of Earnings" first appeared on MarketBeat.