Amazon.com Inc. has managed to alleviate investors’ concerns with its impressive e-commerce and cloud sales. As a result, the company’s shares surged by over 6% in after-hours trading on Thursday.
In the second quarter, Amazon reported a significant expansion in revenue, reaching $134.4 billion compared to $121.2 billion in the same period last year. Moreover, the company achieved a profit of $6.7 billion, equivalent to 65 cents per share. This marks a significant improvement from the previous year’s loss of $2 billion, or 20 cents per share.
According to FactSet, analysts had anticipated Amazon to report earnings of 35 cents per share on revenue of $131.5 billion, making the company’s results particularly impressive.
Of equal importance is the noteworthy increase in operating income, which rose to $7.7 billion in the second quarter from $3.3 billion during the same period last year.
Amazon CEO Andy Jassy expressed his satisfaction with the results, stating, “We managed to reduce our cost to serve in our fulfillment network while simultaneously providing Prime customers with the fastest delivery speeds we’ve ever achieved. Additionally, our AWS growth has stabilized as customers transition from cost optimization to new workload deployment.”
Leading up to the quarterly earnings report, analysts were intently focused on Amazon’s online shopping business performance and whether Amazon Web Services (AWS) would regain its position as the market leader. Notably, Microsoft Corp. recently announced that it anticipates a cooling in revenue growth for Azure and other cloud services in the current quarter. However, Google Cloud recorded a 28% growth in revenue, surpassing Wall Street’s estimates.
Overall, Amazon’s remarkable performance in both e-commerce and cloud services has provided much-needed reassurance to its investors.
Amazon’s AWS Sales Soar, Exceeding Expectations
In its latest earnings report, Amazon announced that its AWS sales saw a significant increase of 12%, reaching $22.1 billion compared to $19.7 billion a year ago. This strong performance surpassed analysts’ expectations of $21.7 billion, as reported by FactSet.
Impressive Profit in Domestic E-commerce Business
Amazon’s domestic e-commerce business generated a remarkable profit of $3.2 billion, with sales reaching $82.55 billion. This exceeded the average analyst projection of an operating profit of $1.5 billion on sales of $79.8 billion.
Overseas Operations Face Losses, Yet Show Strong Sales
While overseas operations reported an operating loss of $895 million, they still achieved notable sales of $29.7 billion. Analysts had anticipated a loss of $1.2 billion on sales of $29.7 billion.
Amazon’s Advertising Business Thrives
Another notable highlight was Amazon’s advertising business, which recorded sales of $10.7 billion—a significant increase from the previous year’s $8.8 billion. This performance aligns with the growing success of digital advertising for major tech companies such as Amazon, Alphabet, and Facebook parent company Meta Platforms Inc.
Positive Future Sales Outlook
Looking ahead to the third quarter, Amazon executives have provided guidance for sales between $138 billion and $143 billion. Analysts’ average projection stands at $138.4 billion.
Market Response and Amazon’s Stock Performance
Following the earnings report, Amazon’s stock rose by 6% in after-hours trading, having already increased by 0.6% during Thursday’s regular trading session, closing at $128.91. Throughout the year, Amazon shares have demonstrated significant growth, rising by 53%, while the broader S&P 500 index has increased by 17%.
Regulatory Speculation Surrounding Amazon
Despite its impressive performance, Amazon faces mounting speculation regarding potential regulatory actions. The Federal Trade Commission is expected to file an antitrust suit against Amazon, particularly focusing on its online marketplace, according to a recent Bloomberg report.
