Amazon (AMZN.US) released Q3 2023 earnings report yesterday after market close, triggering an over-5% jump in company's share price in after-hours trading. Company reported better headline revenue and earnings but growth in its cloud business missed expectations slightly. Let's take a quick look at the release!
Amazon beats expectations but not in cloud
Q3 earnings report from Amazon was solid - sales were higher than expected and so were profits. Operating income surged from $2.53 billion in Q3 2022 to over $11 billion in Q3 2023, marking an over-300% year-over-year increase. Amazon earnings show that high inflation and high interest rates are not discouraging consumer spending, with its e-commerce beating expectations noticeably. However, Amazon's closely watched AWS cloud business disappointed with sales coming in slightly below expectations.
Cloud misses but shows stabilization
AWS sales at $23.06 billion were slightly lower than $23.13 billion expected by analysts. However, the miss was small enough that it can be said that results were in-line with expectations. A key takeaway from the report when it comes to AWS is that it is showing signs of stabilization after multiple quarters of decelerating growth. Given the uncertain macro situation, stabilization in pace of growth is welcome and paves the way for a potential re-acceleration in the final quarter of the year.
Source: Bloomberg Finance LP, XTB Research
Q3 2023 highlights
- Net sales: $143.08 billion vs $141.6 billion expected (+13% YoY)
- Online stores: $57.27 billion vs $56.82 billion expected (+7.1% YoY)
- Physical stores: $4.96 billion vs $4.99 billion expected (+5.6% YoY)
- Third-Party Seller Services: $34.34 billion vs $33.4 billion expected (+20% YoY)
- Subscription services: $10.17 billion vs $10.13 billion expected (+14% YoY)
- AWS: $23.06 billion vs $23.13 billion expected (+12% YoY)
- North America net sales: $87.89 billion vs $87.12 billion expected (+11% YoY)
- International net sales: $32.14 billion vs $32.08 billion (+16% YoY)
- EPS: $0.94 vs $0.58 expected
- Operating margin: 7.8% vs 5.5% expected
- Operating Income: $11.19 billion vs $7.71 billion expected
Q4 2023 forecasts
- Net sales: $160-167 billion (exp. $166.6 billion)
- Operating income: $7-11 billion (exp. $8.7 billion)
A look at the chart
Disappointing earnings releases from other major tech companies, especially Alphabet, triggered a sell-off on Amazon shares earlier this week. Stock broke below the neckline of a head and shoulders pattern, risking a deeper drop. However, as shares are trading 6% higher in premarket, it looks like we may see a return above the SHS pattern neckline ($125 area) at the opening of the Wall Street session today, thus invalidating a bearish technical setup.
Source: xStation5
