Shares of Amazon.com (AMZN +3.42%) climbed on Wednesday, following several positive developments.
Image source: The Motley Fool.
Energy prices pulled back
The U.S. and Iran agreed to a two-week ceasefire that will reportedly allow shipping through the Strait of Hormuz to resume. Roughly 20% of global oil and natural gas shipments flow through this vital waterway. Energy prices declined on the news as concerns about long-term supply disruptions eased.
NASDAQ: AMZN
Key Data Points
Energy is a key input to Amazon's cost structure. Although the e-commerce giant is investing aggressively in electric vehicles (EVs), gasoline-powered vans and compressed natural gas (CNG)-fueled trucks still comprise a significant portion of its delivery fleet. These fuel prices thus have a direct impact on Amazon's shipping costs. When they fall, the online retail titan's profits rise.
Additionally, gas-fired power plants are a key source of electricity for Amazon's sprawling data center network. Lower natural gas prices could help to keep a lid on electricity prices. That, in turn, would help to preserve Amazon's increasingly important cloud computing profit margins.
Bullish analyst commentary
Amazon's stock likely also received a boost from positive remarks from BNP Paribas analyst Nick Jones.
Investors are overly concerned about Amazon's projected $200 billion in capital expenditures in 2026 -- and not fully appreciating the artificial intelligence (AI)-driven revenue gains this spending will enable, according to Jones.
Jones, in contrast, sees Amazon's share price rising approximately 45% to $320, fueled by a surge in AI-related computing demand.
