Amazon beats earnings expectations on e-commerce sales, AWS; stock jumps

Analysts on average expected Amazon to report earnings of 35 cents a share on revenue of $131.5 billion, according to FactSet.

Equally important, operating income increased to $7.7 billion in the second quarter, compared with $3.3 billion in the same quarter last year.

“We continued lowering our cost to serve in our fulfillment network, while also providing Prime customers with the fastest delivery speeds we’ve ever recorded. Our AWS growth stabilized as customers started shifting from cost optimization to new workload deployment,” Amazon Chief Executive Andy Jassy said in a statement announcing the results.

During a conference call with analysts, Jassy drilled down on generative-AI’s increasing importance to AWS and its vast customer base. “The team is working hard to build a $100 billion business” over several years, he told one analyst. Company executives also underscored improved delivery speed to U.S. Prime members.

Read more: The ‘stabilization’ of AWS may have been the most significant number for Amazon’s earnings

Read more: Amazon earnings preview: All eyes on retail and AWS growth

In the days leading up to the quarterly earnings report, analysts were keenly focused on the performance of Amazon’s online shopping business and whether Amazon Web Services’ growth reignited as the market leader. Last week, Microsoft Corp. 
MSFT,
+1.72%
said it expected revenue growth from Azure and other cloud services to continue cooling in the current quarter. Meanwhile, Alphabet Inc.’s 
GOOGL,
+1.20%

GOOG,
+1.28%
Google Cloud revenue grew 28%, topping Wall Street estimates.

Read more: Microsoft earnings top estimates, but stock falls as execs detail AI’s costs

AWS sales improved 12% to $22.1 billion, from $19.7 billion a year ago. Analysts polled by FactSet had expected $21.7 billion.

Jefferies analyst Brent Thill called the performance of AWS proof of its “stabilization” and further evidence of a rebounding cloud market. “AWS is the king of the jungle,” he told CNBC on Thursday.

In Thursday’s earnings report, Amazon reported a profit in its North America e-commerce business of $3.2 billion on sales of $82.55 billion, while analysts on average were expecting operating profit of $1.5 billion on sales of $79.8 billion. Overseas operations suffered an operating loss of $895 million but rang up sales of $29.7 billion, while analysts on average were projecting a loss of $1.2 billion on sales of $29.7 billion.

Amazon’s advertising business racked up sales of $10.7 billion, up from $8.8 billion a year ago. Analysts had predicted $10.36 billion. This performance echoed an uptick in digital advertising for tech behemoths like Amazon, Alphabet and Facebook parent Meta Platforms Inc.
META,
+0.35%.

Read more: Digital advertising is Meta and Google’s world, and everyone else is coping with it

For the third quarter, Amazon executives guided for sales of $138 billion to $143 billion, or to grow between 9% and 13% from a year ago. Analysts on average were projecting sales of $138.4 billion.

Amazon’s stock jumped nearly 10% in extended trading Thursday after inching up 0.6% to $128.91 during Thursday’s regular trading session.

For the year, Amazon shares have advanced 53% while the broader S&P 500 index
SPX
is up 17%.

Amazon’s results come amid mounting speculation that it may soon become the target of regulatory actions. The Federal Trade Commission is expected to soon file an antitrust suit against Amazon focusing on its online marketplace, according to a recent Bloomberg report.