Amazon Delivers Cloud Miss

Amazon is the latest tech giant to report earnings, flailing wildly after the bell as investors digested mixed third-quarter results. 👀

The company’s adjusted earnings per share of $0.94 topped the $0.58 expected, as did revenues of $143.1 billion ($141.4 expected). Advertising was a bright spot, with revenues of $12.1 billion vs. estimates of $11.6 billion.

However, Amazon Web Services revenue of $23.1 billion missed expectations by $0.10 billion. Although the segment widened its operating profit margin, 12% revenue growth lagged Microsoft Azure’s 29% and Google Cloud’s 22%. Analysts are concerned the slowing revenue growth could signal market share loss to its largest competitors. 🔻

When asked by reporters whether the unit’s growth had bottomed in the current quarter, Amazon’s CFO responded, “I wouldn’t quite characterize it that way.” While its customers’ appetite for cloud services remains robust, there are several headwinds facing the entire sector right now. That could mean new work being pushed out to future quarters as companies navigate the economic uncertainty. However, during the earnings call, he “talked up” recent cloud business deal flow that should support fourth-quarter numbers. So, investors received mixed signals at best here. 🤷

The recovery in its core e-commerce business continued, with revenues rising 7% YoY vs. 4% last quarter. Promotional events like “Prime Day,” its “biggest ever” sale, were needed to spur consumer demand in the current environment. Although sales rose 13% YoY in the third quarter, executives’ forecast for fourth-quarter sales of $160 to $167 billion indicates roughly 10% growth. The midpoint of that range is also below analyst expectations of $166.6 billion. 👎

Additionally, Amazon remains focused on cost optimization as it navigates the slower growth environment. It’s laid off 27,000 employees over the last year, also closing down many of its unprofitable initiatives. ✂️

Given Amazon had sold off over the last few days, it was able to take the slowing cloud growth in stride. With that said, it’s clear that investors are focused primarily on that segment of the business, given e-commerce is expected to remain challenged, and advertising is still a smaller segment.

$AMZN shares are up 2% after the bell, offsetting regular-session losses. 🔺

More in   Earnings

View All

Buyers Move Beyond Tech

Animal spirits have been a big theme of this newsletter since October, and boy, are things getting wild. While the mainstream media continues focusing on tech giants like Nvidia, investors and traders are searching far and wide for new opportunities to squeeze the shorts and make a killing. 🕵️‍♂️

Today’s surefire sign of this speculative fervor building in the market is everyone’s favorite non-meat meat stock, Beyond Meat. 🫨

Read It

Disney Snags Two Content Whales

Disney has been struggling with a number of issues ranging from streaming losses to activist investor and political pressures. However, today’s earnings report offered some hope to investors betting on a longer-term turnaround in the stock. 🕊️

The media giant reported $1.22 in adjusted earnings per share on $23.55 billion in revenues. Earnings topped estimates, while revenues were just shy. 

Read It

Lyft’s IR Department Just Whiffed

Investor relations departments are the silent heroes of a public company, receiving little recognition for the critical role they play. When they do receive a lot of attention, it’s generally not for good reason. That’s unfortunately what Lyft’s team is finding out today. 😵‍💫

After the bell, ridesharing company Lyft reported fourth-quarter results that were good, not great. But the stock immediately shot up and notched as high as a 60% gain before anyone realized what happened. Did the company just invent a cure for rare diseases? Are they pivoting to crypto or semiconductors? What was the cause of this?

Read It

Advertisers Remain Un-Pinterested

Although mega-cap technology giants like Meta, Alphabet, and Amazon are having no trouble in the advertising market, smaller players like Snap are. That trend continued today, with Pinterest missing revenue estimates. Let’s take a look at the numbers. 👇

The social media company’s adjusted earnings per share of $0.53 topped the expected $0.51. However, revenues of $981 million were $10 million shy of estimates despite rising 12% YoY.

Read It