Where to Buy Amazon After $10 Billion OpenAI Update

On the morning of Monday, December 8, I wrote to readers discussing my interest in the shares of Amazon (AMZN)  for the coming year. 

I remain flat six of the seven names that comprise the "Magnificent Seven." Nvidia (NVDA)  is my only remaining "long" among those mega-cap stocks bunch and, as I mentioned in that piece, that name is only my ninth-largest position in terms of capital allocation. I have not yet pulled the trigger. Good thing, I suppose. 

When I wrote that piece, AMZN was trading with a $230 handle. The stock closed on Tuesday afternoon at $222.56.

The interesting thing, at least to me, and this is my own myopic view, is that this is the one Mag Seven name that I just spent a year or so avoiding. While the S&P 500 is up 15.6% year to date and the Nasdaq Composite is up 19.7%, AMZN closed Tuesday night up just 1.4% for 2025.

However, when throwing the ball around in my head, as I often think as much if not more than I act, there's a story here. 

Of all of the hyper-scaling names across the Mag Seven, due to the nature of its online retail business, this firm is required to operate and maintain a massive warehousing and delivery network. That has, over a number of years, forced the firm into the position of incurring labor-related overhead costs such as wages and associated benefits at a scale not relevant to other mega-cap tech firms.

The firm also runs physical stores and other businesses, but the margin is in advertising and in the AWS cloud services/data center platform. That is when the firm is not pouring capital into its expansion into generative artificial intelligence. That's the thing. Yes, AI is expensive. That's why Amazon has been working on being more reliant upon its own custom in-house chips and less reliant upon those designed by the likes of Nvidia.

Opportunity

That's why, of all of the mega-caps, Amazon, in my opinion, has the greatest opportunity to benefit from the increased implementation of AI into the firm's operations. Think of the increased efficiencies, the increased productivity, and unfortunately, the decreased need for an overtly large human labor force. Amazon has a tremendous potential for increased margin performance as its operations evolve into something smarter and more capable.

As generative artificial moves out of its infancy and into greater democratized use across any number of industries, productivity gains in the U.S. economy will become quite evident, probably at the expense of labor. 

Unlike the rest of "big tech," Amazon, in my opinion, will benefit from that democratization rather than suffer from a broadening of the wealth as will those running AWS competitors, such as Microsoft (MSFT)  and Alphabet (GOOGL) , or doing whatever Meta Platforms (META)  is doing with its Metaverse. That last firm has been going through some high-profile growing pains of late.

That Said...

There is news on Wednesday morning. According to Bloomberg News, where I read it, OpenAI is said to be in preliminary discussions to raise at least $10 billion from Amazon. The original story ran at "The Information." 

If this deal comes to pass, it is possible that OpenAI could end up using Amazon's in-house Trainium AI chips or TPUs. Such a deal would also likely value OpenAI at more than $500 billion.

This would be something of a change of direction for OpenAI. OpenAI, until now, has almost always been reliant upon GPUs designed by Nvidia for its semiconductor needs. OpenAI has also had a long association with Microsoft's Azure as Microsoft had been an early investor in what was then a startup.

A deal such as this would also serve to grow any association by OpenAI with Amazon Web Services. In early November, OpenAI had announced a $38 billion deal with AWS, referring to the AWS platform as "best in class" infrastructure.

The Chart​

​Readers will see a flat base that produced a failed breakout in late October/early November. As that breakout failed to hold, the post-earnings gap, created on the way, filled. Then the stock lost both its 21-day EMA and 50-day SMA without much of a fight. 

To me, that showed me that in early- to mid-November, neither the swing crowd nor the pros were interested in defending this stock. The stock made one more attempt to rally and hit resistance where resistance had been prior to the failed breakout.

It looks as if the stock has either repeatedly found support at either the bottom trendline of this flat base pattern or at the 200-day SMA. The two could be one and the same. That's where, in a utopian environment, I want to buy the shares. 

Readers will also see that the reading for relative strength is now weaker than neutral as the daily MACD has taken on a bearish posture.

Bottom Line

I want to own these shares for 2026. I am watching the 50-day SMA today. If the shares fail there, I will wait for my price down in the $215 to $220 range. If we do see a break above that line that finds support at that line, then I will initiate above the 50-day SMA.

Amazon is my runner-up for "Stock of the Year" for 2026. I gave you Palantir Technologies  (PLTR)  as my stock of the year for 2024 and also for 2025. That stock was up 340% in 2024 and is now up 148% year to date for 2025.

At the time of publication, Guilfoyle was long NVDA and PLTR equity.