Amazon.com Inc (AMZN) is marginally down in extended hours even though it reported better-than-expected results for its fiscal third quarter.AWS was in line with expectations in Q3Shareholders seem iffy because Amazon Web Services – traditionally the strongest segment of the tech behemoth jumped 12% year-on-year to $23.1 billion which was about in line with expectations only.AWS, however, generated $7.0 billion in operating profit for Amazon in its recently concluded quarter versus $5.4 billion a year ago. On CNBC’s “Closing Bell: Overtime”, Paul Hickey – the Co-Founder of Bespoke Investment Group said:
It’s a very big part of Amazon’s business. You want to see that strength, especially since they discussed that in their last earnings call. They were talking about seeing a pickup in that.
Last month, Amazon.com Inc. announced a $4.0 billion investment in Anthropic to expand its footprint in artificial intelligence as Invezz reported here.Video Length: 00:04:14Amazon did not issue an impressive guidanceInvestors are a bit concerned also because the future guidance was not particularly exciting.Amazon is now calling for $160 billion to $167 billion in sales in the fourth quarter versus analysts at $167.2 billion. Still, JMP Securities analyst Nick Jones told Yahoo Finance today:
They have a focus on cost control and they’re really utilizing their infrastructure. Operating income margins look really good … eCommerce continues to gain share.
Outlook for operating income of $7.0 billion to $11 billion in Q4 did surpass the Street estimates, though. Amazon stock is currently up close to 40% year-to-date.Notable figures in Amazon’s Q3 earnings release
Note that FTC came together with 17 states in September to file a complaint against Amazon (read more). According to Nick Jones, though:
I don’t think [investors should be very concerned. We don’t see any of Amazon’s practices as illegal. We think the [accusations] are overdone.
He doesn’t see a consumer slowdown as much of a threat for Amazon either.Ads business performed well in the third quarterAdvertising continued to be a solid business for Amazon in Q3 – bringing in $12.1 billion in sales versus $9.6 billion in the same quarter last year.Experts, in comparison, had called for $11.6 billion instead, as per the earnings press release. JMP Securities’ Jones added:
Advertising continues to outperform, which delivers a lot of margin upside. They’re pulling various levers to give investors what they’re looking – which is better operating margin.
First look at our new Amazon Ads GenAI capability (in beta). All sellers or brands need to do is upload a product photo and description to quickly create unique lifestyle images that will help customers discover products they love. https://t.co/FPvjb72fyj pic.twitter.com/unxcrx1d8l
— Andy Jassy (@ajassy) October 25, 2023
Other notable figures in the earnings release include a 7.0% annualised growth in online store sales to $57.3 billion and a 14% increase in subscription services revenue to $10.2 billion.More By This Author:The ECB Day Did Not Move The Euro, Although A Dovish Message Prevailed U.S. Real GDP Rose The Fastest Since Q1 2022; Should You Buy The Dollar? HSBC Share Price Forms A Worrying Chart Pattern Ahead Of Earnings
