The Last 2 Times Amazon’s RSI Did This, the Stock Rallied 60%

Key Points

• Amazon has slid roughly 20% from last year’s all-time high, with the selloff accelerating after last week’s earnings report. 
• The stock’s RSI has now dipped below 30, a rare occurrence that previously preceded big recovery rallies. 
• With analysts still overwhelmingly bullish and price targets ranging north of $300, the risk/reward profile is looking quite attractive.

Having started the year near $250, tech titan Amazon.com Inc NASDAQ: AMZN is currently trading around $210.

A choppy January turned into a bruising start to February after the company reported a rare earnings miss last week and unveiled a sharply higher capital expenditure forecast that rattled investors.

The stock gapped down following the report and has shown few signs of wanting to reclaim lost ground. What was meant to be a strong start to the year has instead turned into investors’ first confidence test of 2026.

The stock is now roughly 20% below its November all-time high, with momentum clearly swinging to the bears.

Yet beneath the surface, something interesting is happening. Thanks to the one-sided flow of sellers dominating buyers, Amazon’s relative strength index (RSI) has sunk below 30, pushing the stock into extremely oversold territory. That doesn’t happen often, but history suggests it’s worth paying attention when it does.

An Interesting Pattern

The last time Amazon’s RSI dipped below 30, and into extremely oversold territory, was in April of 2025. The stock went on to rally roughly 60% from that low. Before that, the previous sub-30 reading occurred in the summer of 2024 and was also followed by a powerful rebound of around 60%.

That doesn’t mean we’re guaranteed a repeat this time, but it does suggest there’s a pattern here that’s worth watching closely. When sentiment around Amazon becomes this washed out, it has tended to precede massive upside rather than further downside. 

Why This Setup Could Rhyme With the Past

As regular readers will know, there are lots of reasons to be bullish on Amazon’s prospects, even outside of this technical setup. For one, the current weakness is not driven by a broken business model so much as by anxiety about spending.

Investors were spooked not just by the minor earnings miss, but also by the scale of capital expenditure tied to Amazon’s AI ambitions. In a market that has grown more sensitive to spending discipline, that headline carried more weight than usual. 

However, the company’s fundamentals remain largely intact. AWS growth, for example, remains solid, and Amazon’s retail business continues to tick over nicely. A single earnings miss, especially one measured in single-digit pennies, does not erase that.

Analysts Are Still Screaming Buy, Buy, Buy

Just as importantly, the fact that analyst support has barely wavered. Since the report, there has been near-unanimous backing of the stock as a Buy, with firms such as Morgan Stanley, Wells Fargo, and Argus setting new price targets of $300 or higher. From current levels, that implies more than 40% upside.

That may not quite be the 60% surge seen after the prior RSI washouts, but it is close enough to highlight the opportunity taking shape right now. 

What Could Derail the Bounce Thesis

The obvious risk is that this time is different. If the company’s capital spending continues to balloon without visible returns, or if broader tech sentiment deteriorates further, oversold conditions alone will not be enough to drive a recovery in shares. A stock can always remain oversold longer than investors expect, no matter how good its fundamentals or how strong the support from analysts is.

There is also the technical reality that Amazon's recent efforts to rally have been underwhelming. While the stock showed signs of being snapped up off its post-earnings lows on Feb. 6, the next trading days saw little follow-through. 

Watching the Ticker

For now, it’s all about how the stock behaves in the short term. With tech stocks in general under pressure, it might be too much to expect an immediate snapback in Amazon shares. However, if signs emerge that selling pressure is fading and buyers are stepping back in, things could get interesting.