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Amazon.com Inc. soothed jittery investors with a massive beat on earnings despite quarterly cloud sales that came up slightly short and soft fourth-quarter guidance, initially sending its shares up 4% in after-hours trading Thursday.
Amazon
AMZN,
said third-quarter revenue swelled 13% to $143.1 billion from $127.1 billion in the same quarter last year. Profit was $9.9 billion, or 94 cents a share, improving from $2.9 billion, or 28 cents a share, a year ago.
Analysts on average expected Amazon to report earnings of 59 cents a share on revenue of $141.5 billion, according to FactSet.
Equally important, operating income increased to $11.2 billion in the third quarter, compared with $2.5 billion in the same quarter last year.
The company offered soft fourth-quarter revenue guidance of between $160 billion and $167 billion, while FactSet analysts are projecting $167.1 billion.
“We had a strong third quarter as our cost to serve and speed of delivery in our Stores business took another step forward, our AWS growth continued to stabilize, our Advertising revenue grew robustly, and overall operating income and free cash flow rose significantly,” Amazon Chief Executive Andy Jassy said in a statement announcing the results.
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.
AWS sales improved 12% to $23.1 billion, while analysts polled by FactSet had expected $23.2 billion. Earlier this week, Alphabet Inc.’s
GOOGL,
GOOG,
Google and Microsoft Corp.
MSFT,
reported cloud sales that disappointed investors.
In Thursday’s earnings report, Amazon reported sales in North America of $87.9 billion, while analysts on average were expecting $86.1 billion.
Amazon’s advertising business racked up sales of $12.1 billion, up from $9.6 billion a year ago. Analysts had predicted $11.6 billion. The performance paralleled a bounce back in digital advertising for Alphabet, Facebook parent Meta Platforms Inc.
META,
and Snap Inc.
SNAP,
Amazon reported amid a backdrop of concerns over its cloud and artificial-intelligence businesses, as well as an antitrust lawsuit from the Federal Trade Commission.
Amazon, which has trailed Microsoft and Google in the race to develop and deploy AI, last month said it would invest up to $4 billion in AI startup Anthropic to turbocharge its efforts in the cloud and e-commerce.
Investors were also intrigued by Amazon’s response to the FTC’s action last month accusing the company of operating a monopoly that squeezes smaller competitors.
Amazon General Counsel David Zapolsky claims the suit would lead to “higher prices and slower deliveries for consumers—and hurt businesses.”
Shares of Amazon have advanced 42% so far this year, while the S&P 500
SPX
is up 8%.
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