Amazon’s Latest Results Were Prime Viewing

Amazon’s Latest Results Were Prime Viewing
Paul Allison, CFA

about 1 month ago2 mins

What’s going on here?

Amazon released better-than-expected quarterly earnings late on Thursday, and they made for some top-quality viewing.

What does this mean?

After a so-so week of earnings, Amazon’s results might be just the ticket to get investors back onside. Crucially, Amazon Web Services (AWS) – the firm’s prized cloud business – made 12% more money last quarter compared to the same time last year, beating the result from the quarter before. And advertising revenue held its own too, outdoing the previous quarter to pick up by 25%. What’s more, Amazon’s profit margins beat expectations, especially over at AWS. And while Big Tech investors have been hard to please, that may just be enough to get the corner of their mouths twitching upward.

AWS sales

Why should I care?

The bigger picture: Hey, big spender.

If Amazon was a rom-com, it would be “Confessions Of A Shopaholic”. The company’s always loved spending money, but this year’s a proper spree: Amazon’s projected to spend $50 billion on major projects, roughly five times the average of the five years leading up to the pandemic. And sure, some tighter budgets could make the books look a lot prettier, but for now, Amazon’s willing to throw money in every direction if it could pay off down the line.

For markets: Make like Meta.

Mind you, investors won’t go piling into Amazon unless they believe the stock’s decent value. They’ll be watching revenue to find that out: ideally, AI-driven cloud and advertising bucks bring Amazon’s revenue growth closer to the pre-pandemic range of 20%. In that case, investors will be all too happy to ignore the company’s frivolous spending habits and trust the process. But if that doesn’t pan out, Amazon will need to rein itself in, spending more carefully like Meta has this year.

Amazon stock
Source: Google Finance


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