Topline
Amazon beat Wall Street forecasts in its third-quarter earnings report released Thursday afternoon, as the West Coast e-commerce and software giant looks to return to its 2021 glory, though its projections for the key holiday period came in below expectations.
Key Facts
Amazon’s $143.1 billion in revenue topped consensus analyst estimates of $141.5 billion, according to FactSet, while its $0.94 earnings per share smashed forecasts of $0.59.
Overall net income more than tripled year-over-year to $9.9 billion.
Crucially, Amazon said it expects revenues in its busiest fourth quarter to come in between $160 billion and $167 billion and operating profits to be between $7 billion and $11 billion.
The $163.5 billion midpoint projection for sales is below average analyst forecasts of $167.1 billion while the $9 billion midpoint operating income projection tops average analyst forecasts of $8.5 billion.
Amazon stock rose 4% to about $125 in limited trading after the earnings release.
Big Number
$23.1 billion. That’s how much revenue Amazon’s AWS cloud computing unit brought in last quarter, narrowly coming short of analyst estimates of $23.2 billion and last quarter’s $22.1 billion of sales.
Tangent
The weaker than expected revenue for AWS, Amazon’s heaviest artificial intelligence-facing segment, came during a week of unusually intense interest in cloud computing on Wall Street. Fellow tech titans Alphabet and Microsoft’s Tuesday earnings reports painted very different pictures in the cloud, with Microsoft’s growth in the division topping forecasts and Alphabet’s falling short, causing the Google parent to notch its worst stock losses of 2023.
Key Background
Amazon, Microsoft and Alphabet are three of the “magnificent seven” tech stocks powering much of this year’s market gains, banding together with Apple, Meta, Nvidia and Tesla. Shares of Amazon are up more than 40% this year but are still down about 30% from its 2021 all-time high thanks in part to the Seattle-based firm posting its first unprofitable year in nearly a decade last year. The company’s roughly $16 billion in net income through the first nine months of 2023 put Amazon well on pace to turn a profit this year, though its windfall will likely fall well short of 2022’s record $33 billion profit. Part of Amazon’s recovering bottom line is due to the company laying off roughly 27,000 employees earlier this year.
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