Amazon Stock Market Jumps on Strong Earnings

Amazon Stock Market Jumps on Strong Earnings crsreo

Stock Market.- For the first quarter ended March 31, Amazon reported net sales of $127.4 billion, up 9% from a year earlier. Wall Street was expecting revenue of $124.6 billion. Earnings were 31 cents per share, well above analysts’ consensus estimate of 21 cents.

Most of the outperformance was driven by the company’s retail unit. The company reported net sales of $51.09 billion in its Online Stores segment versus estimates for $50.67 billion. Its third-party business generated net sales of $29.82 billion, more than a $1 billion greater than what analysts had expected.

Growth in the company’s AWS cloud unit came in roughly as expected with net sales of $21.35 billion, up 16% from a year ago.

Also, Amazon Stock Market said it expects second-quarter net sales of $127.0 billion and $133.0 billion, implying growth of 5% to 10% from the second quarter of 2022. The range is roughly in line with Wall Street’s second-quarter forecast of $129.9 billion.

The company’s outlook for operating income, though, was a bit lower than expected. The company said it expected second-quarter operating profit of $2 billion to $5.5 billion; at a midpoint of $3.75 billion, that forecast is below analysts’ expectations for $4.4 billion.

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“Our Stores business is continuing to improve the cost to serve in our fulfillment network while increasing the speed with which we get products into the hands of customers,” Amazon CEO Andy Jassy said.

Jassy said that the AWS business is navigating “companies spending more cautiously in this macro environment.”

“We like the fundamentals we’re seeing in AWS, and believe there’s much growth ahead,” he said.

Microsoft MSFT +3.20% and Alphabet GOOGL +3.74% both reported improving cloud results this week.

Retail trends have been difficult of late based on recent earnings from United Parcel Service UPS +3.01% (UPS) and Packaging Corp. of America (PKG). UPS, which ships packages, beat its quarterly estimates but set its guidance at the low end of its range, while Packaging Corp., which makes the boxes things get shipped in, outright missed and lowered its guidance as box shipments fell.

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Amazon, like Meta Platforms META +13.93% (META) and others, has been focused on reducing its expenses—a roundabout way of saying that it has been firing people

Finally, “Amazon’s headcount reductions, which continued through April, may signal weakness in the core business, with management sending a signal to investors that it can manage expenses in tough times,” writes Wedbush analyst Michael Pachter. “With that said, Amazon’s workforce is quite large, suggesting that it can weather layoffs with little impact on revenue growth, driving corresponding margin increases throughout all of its business lines.”

Shares of Amazon were up 31% this year heading into tonight’s earnings report.