E-commerce and cloud computing giant Amazon.com beat analyst expectations for the second quarter and offered a better-than-expected outlook. Amazon stock surged Friday on the news.
The Seattle-based company late Thursday said it earned 65 cents a share on sales of $134.4 billion in the June quarter. Analysts polled by FactSet had expected Amazon earnings of 35 cents a share on sales of $131.5 billion. In the year-earlier period, Amazon lost 20 cents a share on sales of $121.2 billion.
For the current quarter, Amazon forecast operating income of $7 billion on sales of $140.5 billion. That's based on the midpoint of its guidance. Analysts had been calling for operating income of $5.5 billion on sales of $138.3 billion.
The company's cloud computing unit, Amazon Web Services, saw revenue increase 12% year over year to $22.1 billion in the second quarter. That was slower than the 16% growth in the first quarter, but topped estimates for 10% growth. Also, Amazon executives said AWS sales have stabilized.
Amazon Stock Surges After Report
On the stock market today, Amazon stock jumped 8.3% to close at 139.57. During the regular session Thursday, Amazon stock climbed 0.6% to end trading at 128.91.
Year to date through Friday's close, Amazon stock is up 66%.
"It was another strong quarter of progress for Amazon," Chief Executive Andy Jassy said in a news release. "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."
Those new AWS workloads included generative artificial intelligence applications, Jassy said.
"AWS has continued to add to its meaningful leadership position in the cloud with a slew of generative AI releases that make it much easier and more cost-effective for companies to train and run models (Trainium and Inferentia chips), customize Large Language Models to build generative AI applications and agents (Bedrock), and write code much more efficiently with CodeWhisperer," he said.
On a conference call with analysts, Jassy said he sees generative AI driving growth for AWS.
"I'm very bullish on the growth of AWS over the next several years," he said. "We're acquiring a lot of new customers and a lot of new workloads."
Price-Target Hikes For AMZN Stock
At least 28 Wall Street analysts raised their price targets on Amazon stock after the earnings report.
Rosenblatt Securities analyst Barton Crockett upgraded Amazon stock to buy from neutral. He also raised his price target to 184 from 111.
"As the business resets, with efficiency a new focus for retail, and AI an emerging driver in cloud, the risk of impending economic headwinds looks less worrying, opening the door to higher multiple consumer growth stories," Crockett said in a note to clients.
UBS analyst Lloyd Walmsley reiterated his buy rating on Amazon stock and raised his price target to 175 from 150. He called Amazon's second-quarter results "an inflection quarter" and sees improving growth on the top and bottom lines ahead.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
