Why Amplitude Stock Jumped 23% in October

Shares of Amplitude (NASDAQ:AMPL) were among the winners last month as the data analytics software stock benefited from a broader rotation out of AI infrastructure stocks into undervalued stocks like Amplitude, and it also got a number of positive analyst notes during the month.

Though there was no major company-specific news out on Amplitude, those factors were enough to push the stock up 23% by the end of the month, according to data from S&P Global Market Intelligence.

As you can see from the chart below, Amplitude stock soared over a few days starting on Oct. 20 as investors fretted about AI infrastructure spending and as interest rates started to come down.

AMPL data by YCharts

What happened with Amplitude last month

Amplitude stock has rallied this year as it's delivered solid top-line growth and emerged as an attractive AI software stock.

The stock started rallying on Oct. 19, gaining 18% over a five-day span as investors rotated into the stock amid a weakening AI infrastructure trade and balked at sky-high capital spending. Meta, for example, tumbled as it reported its first quarter with a free cash flow loss since it went public.

Amplitude, as an AI software company trading at a reasonable price, may have been seen as an attractive alternative by some investors, leading to the gains.

Additionally, the stock benefited from positive analyst commentary in the quarter. Bank of America raised its price target on the stock from $14 to $16.50, and then again the following week to $19, on a more positive long-term view on the company. BTIG, similarly, raised its price target from $13 to $17, betting that the company could achieve annual recurring revenue acceleration in its third-quarter earnings report.

Image source: Getty Images.

What's next for Amplitude

The software-as-a-service (SaaS) stock is due up to third-quarter earnings on Thursday. Analysts are expecting revenue to increase 20.9% to $107 million, and adjusted earnings per share to tick up from $0.02 to $0.03.

Amplitude's top-line growth has steadily recovered from a post-pandemic slump, and 21% would match its second-quarter result, which was its fastest pace in years, showing that its strategy is paying off.

The company is now focused on developing self-improving products, and it acquired Statsig from OpenAI to help it toward that goal.

Investors should get an update on that integration and its progress on self-improving products. If revenue tops expectations, the stock could get another bump.

Jeremy Bowman has positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.