Flat growth over the last 4 years under Jassy. Too many misses, too much spending. More layoffs. Hint: layoff Managers running tiny teams or low performing Managers. If you have a team of 1-4, then it's half a pizza team. Remove all bad Managers from these teams, merge with good Managers. Reduce useless hierarchies.
======================================================================
Amazon’s revenue came in below Wall Street’s expectations, with the stock was down nearly 8% in after-hours trading. But CEO Andy Jassy talked up the company’s AI investments and solid cloud business growth in a call with investors after results came out.
Sales for the quarter ending in June were $148 billion, up 10% from the same period last year, just shy of analyst estimates of $148.7 billion. Earnings of $1.26 a share were up 94% and well above estimates of $1.03 a share among analysts polled by FactSet.
Its Amazon Web Services cloud unit brought in $26.3 billion for the quarter, a 19% increase, and above the $26 billion estimate. That’s slightly below the 21% growth from rival Microsoft’s cloud business, which brought in $28.5 billion during the same period.
Jassy said on the earnings call that he expects AWS to continue growing as more companies migrate their IT spending away from in-house systems to cloud-based solutions. As for the company’s generative AI business within AWS, he said, “it’s going to get big fast.”
Advertising services posted the highest growth rate of any unit at 20% for $12.8 billion in revenue, below analyst expectations of 21.7%.
Operating income continued to impress as well, rising 91% in the second quarter from a year earlier, to $14.7 billion, after rising 80% in the first quarter. The second quarter number was higher than prior guidance.
But the company gave weaker than expected third quarter guidance, seeing revenue in a range of $154 billion to $158.50 billion, while analysts were estimating $158.22 billion.
What’s more, capital spending soared to $16.4 billion, up from $13.9 billion in the first quarter, and a 58% increase from the year-ago period. That’s well above spending by other Big Tech companies such as Microsoft, which spent $13.9 billion, and Alphabet at $13.2 billion during the same period.
“We’re investing a lot in AI,” CEO Jassy said on the earnings call, adding that the company is “very bullish” on AI’s medium-to-long-term outlook. Amazon expects to spend even more in the second half of the year, CFO Brian Olsavsky added.
That’s not the only thing Amazon is investing in. It’s also planning to launch a broadband internet satellite network, known as Project Kuiper, later this year, Jassy said. It’s also looking to grow its same-day pharmacy service, currently available in cities like Miami, Phoenix and Seattle.
Analysts have been mostly upbeat about Amazon, with nearly all of those tracked by FactSet rating it a Buy ahead of earnings. Mizuho’s James Lee called it his top pick for the June quarter due in large part to AWS growth. JPMorgan Doug Anmuth called Amazon its “best idea” across the internet sector, along with Uber and Alphabet.
But Big Tech earnings for the quarter ending in June have been a mixed bag so far in terms of investor reactions. Alphabet
GOOGL
- 0.45%
, Apple and Microsoft all fell after they reported, while a solid beat for Meta Platforms on Wednesday sent the stock up nearly 5% on Thursday.
Despite a recent slump affecting much of Big Tech, Amazon shares remain up 21% for the year. By comparison, the Nasdaq Composite
COMP
- 2.30%
is up 15% for the year.
Shares closed down 1.6% in regular trading to $184.07. It was a bad day for big tech, with shares of Apple, which also reported earnings Thursday, closing down 1.7%. Chip maker Intel was also hit hard, falling 19% in after hours trading to $23.45 after saying it would suspend dividends and cut 15,000 jobs.
The major indexes all fell Thursday as well, with the Nasdaq dropping 2.3% and the S&P 500 down 1.4%.