Amazon Shatters Earnings Forecasts and Stocks Surge, Boosted by Recent Layoffs

amazon-shatters-earnings-forecasts-and-stocks-surge-boosted-by-recent-layoffs

A multitude of redundancies weakened the strength of the once-mighty earnings. Amazon (AMZN) surpassed analyst profit projections for the second quarter on Thursday as a result of a year-long effort to reduce costs through massive cutbacks. Amazon Web Services kept dropping market share to Microsoft and Google, which resulted in an increase in profits despite a decline in sales.

Amazon’s stock rose approximately 7% in after-hours trading. The e-commerce giant’s cloud division, Amazon Web Services, or AWS, outperformed Wall Street’s projections by a small but significant margin, with revenue coming in at $22.14 billion compared to $21.71 billion. In addition, Amazon’s revenue forecast for the third quarter was significantly higher than anticipated, falling in between $138 billion and $143 billion instead of the expected $138.3 billion. Cloud results are currently at the forefront of tech investors’ minds due to the sector’s current decline and uncertain future. Currently, investors appear satisfied with the profit line. 

The decline in revenues

Actual Net Sales: $134.38 billion compared to $131.63 billion forecast (guidance: $127 billion to $133 billion).

EPS: $0.65 versus estimates of $0.35

AWS (Amazon Web Services) Net Sales: $22.14 billion versus the expected $21.71 billion

Operating Margin: 5.7% as opposed to the estimated 3.45%

Operating Income: $7.68 billion compared to $4.72 billion anticipated

Outlook for Q3 Net Sales: $138 billion to $143 billion versus the estimated $138.3 billion

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AWS Sales Surge, Azure’s Growth Slows, and Google Cloud Turns Profitable

amazon-shatters-earnings-forecasts-and-stocks-surge-boosted-by-recent-layoffs
Photo by: Johnny Milano via Bloomberg

AWS sales increased by 13% year over year, excluding the impact of volatile foreign currencies. First-quarter revenue for AWS increased by 16%. For its part, Microsoft Azure’s revenue growth slowed in the second quarter, as it has every quarter since at least the third quarter of last year. Google Cloud became profitable for the first time in Q1 and generated $395 million in revenue in Q2 — a dramatic contrast to the same period last year, when it recorded a loss of $550 million. 

After months of significant cost-cutting efforts led by CEO Andy Jassy, Amazon’s operating income increased. This efficiency drive has manifested itself visibly in the company’s 27,000 redundancies to date. In addition, the link between Prime Day and Amazon’s Q3 outlook is noteworthy. Amazon held its frequently seismic Prime Day event in July, and those sales will be fully reflected in Q3 as a result. Amazon has already disclosed that the first day of the July event was the largest single-day sales day ever, with consumers spending over $2.5 billion on more than 375 million products.

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Source: Finance Yahoo, KRDO

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