Amazon stock jumped after the e-commerce and cloud computing giant reported its third-quarter results late Thursday. Revenue growth of 11% powered better-than-expected earnings.
Amazon said that it earned an adjusted $1.43 per share on sales of $158.9 billion for the September-ended quarter. Analysts polled by FactSet projected the Seattle, Wash.-based company would post adjusted earnings of $1.14 per share on sales of $157.3 billion.
For the current quarter, Amazon guided for sales of $185 billion at the midpoint of its range. Analysts were projecting the tech giant to tally $186.3 billion in December-quarter sales, according to FactSet. But the company's guidance for operating income of $18 billion easily bested the $17.3 billion analysts were looking for, according to FactSet consensus.
On the stock market today, Amazon stock rallied more than 3% to 192.84 in after-hours action. Shares had lost 3% in regular trading Thursday.
Amazon Stock: Answering Cloud Concerns
Amazon traded down for much of the day Thursday ahead of its results. Analysts pinned the gloom on a weak sales forecast given late Wednesday by Microsoft, which operates a cloud rival to Amazon Web Services.
AWS revenue did come in slightly lower than anticipated, with $27.45 billion in sales compared with estimates of $27.5 billion. But the $10.4 billion in operating income from the profit-driving cloud business exceeded expectations of $9.1 billion.
Amazon's retail-focused North America division also exceeded operating income expectations, growing 32% to $5.7 billion, ahead of estimates for $5.4 billion. The North America segment includes sprawling e-commerce operations, Amazon's advertising and seller services business, as well as Project Kuiper satellite internet business.
Analysts have been debating how long Amazon can continue the steady improvement to its profitability seen under Chief Executive Andy Jassy. After all, the company is spending billions on chips and new data centers to power its AI ambitions. It is also ramping up spending on its Project Kuiper satellite internet initiative. Amazon stock is still trading below highs reached in early July.
RBC Capital analyst Brad Erickson called Amazon's Q3 a "better than feared" report.
"Total revenue beat expectations driven by first-party, Prime and to a lesser degree advertising, partly offset by modest miss out of (third-party seller fees) and AWS 20 basis points below Street," Erickson wrote. "Even in spite of (third-party) and AWS results, the company saw a big beat on earnings before interest and taxes, with AWS the primary driver and, to a lesser degree, retail also came in ahead of expectations."
Amazon Stock Technical Scores
Prior to posting earnings, Amazon stock was about 7% below a 201.20 consolidation pattern buy point, according to MarketSurge. The 201.20 buy point represents a record high Amazon reached in early July before pulling back that month.
Amazon's Relative Strength Rating sits at 75 out of a best-possible 99. That means Amazon has outperformed 75% of stocks in IBD's database over the past 12 months. IBD recommends focusing on stocks with at least an 80 RS Rating.
The IBD Stock Checkup tool shows Amazon stock holds an IBD Composite Rating of 92 out of a best-possible 99. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
