Amazon is about to report earnings, and here's one thing to watch

Amazon will be the latest FANG stock to report earnings with its release after the bell Thursday.

And one market watcher expects the e-commerce leader to knock it out of the park.

"We own this one and we continue to love the growth story," said Mark Tepper, president of Strategic Wealth Partners, on CNBC's "Trading Nation" on Wednesday. "The bears always focus on the multiple, the forward P/E which is high ... but it's really not that expensive in terms of its growth."

Amazon trades at 59 times forward earnings, meaning investors are prepared to pay a high price for its shares on the expectation of future profit growth. The company has been expanding at a fast clip – it has never had a year of single-digit growth.

One factor that Tepper believes should help Amazon continue to deliver is its growth in an exploding industry: cloud computing.

"They're still the cloud leader to enterprise customers with [Amazon Web Services] and AWS revenues are growing at over 40 percent year over year and that's their high margin business," said Tepper. "The potential there is huge and we're really watching the growth there."

In its third quarter, AWS revenue increased 46 percent, while operating income grew by 77 percent. The segment makes up around 10 percent of total revenue, according to FactSet estimates.

Amazon's moves heading into earnings have put it at an interesting inflection point which could mean a breakout, said Craig Johnson, chief market technician at Piper Jaffray.

"The stock has now reversed the downtrend off those September highs and now we're consolidating between the 50- and 200-day moving average," Johnson said. "As you move through the 50- and 200-day moving averages I think the stock is going to become even more technically interesting for investors."

Amazon hit a record high in September before tumbling in December. Since then, it has rallied 30 percent. Johnson said the options market is pricing in a 5 to 6 percent implied move after earnings, suggesting a $100 swing in either direction.

Disclosure: Strategic Wealth Partners has a position in Amazon.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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