Amazon’s stock price surged by 5% in after-hours trading on Thursday following the release of their strong third-quarter earnings report. The company performed better than expected, with revenue and earnings per share surpassing Wall Street’s forecasts. Looking ahead, Amazon anticipates revenue between $181.5 billion to $188.5 billion for the fourth quarter, slightly below analysts’ expectations of $186.36 billion. Operating income is projected to be in the range of $16.0 billion to $20.0 billion, exceeding Wall Street’s estimate of $17.49 billion.
During the third quarter, Amazon reported earnings per share of $1.43 on revenue of $158.9 billion, outperforming analysts’ predictions of $1.16 on revenue of $157.29 billion. Amazon Web Services, a key revenue generator for the company, brought in $27.45 billion, in line with Wall Street’s projections. CFRA senior equity research analyst, Arun Sundaram, highlighted Amazon’s 11% operating margin as a key factor driving the stock price higher. This margin exceeded Wall Street’s expectations of 9.34% and showcased Amazon’s ability to leverage various aspects of its business to boost margins while investing in AI technology.
The recent earnings reports from Big Tech companies have been volatile, with a particular focus on AI spending and management strategies. Alphabet exceeded expectations with strong performance in its cloud and advertising segments, posing competition to Amazon. However, Microsoft and Meta faced challenges as their stocks dipped due to concerns over increased AI spending, despite beating expectations in their earnings reports.
Amazon revealed plans to invest $75 billion in capital expenditures in 2024, with CEO Andy Jassy hinting at even higher spending in 2025. This increased investment is fueled by the opportunities presented by generative AI, which Jassy described as a unique chance for growth. The company aims to stay ahead by investing in data centers, networking gear, and AI hardware to meet the growing demand and enhance customer experience.
Overall, Amazon’s strong Q3 earnings have positioned the company for growth and innovation, reflecting its commitment to harnessing the potential of AI technology. As competition in the tech industry intensifies, strategic investments in AI and other emerging technologies will be crucial for companies like Amazon to maintain their competitive edge and drive future success.
