Amazon Beats Across The Board, But AWS Comments Spook Markets
Amazon delivered solid quarterly results on Thursday afternoon in the US, joining mega-cap peers Microsoft, Alphabet and Meta in handily topping forecasts.
Revenue of $127.36 billion rose 9% YoY in Q1, and easily beat the $124.7 billion the Street expected.
The company said current-quarter sales will be between $127 billion and $133 billion. That's probably good enough. Headed in, consensus for Q2 was right in the middle of that range.
Assuming the midpoint, which is probably conservative,
Wait till the conference call you overpaid analysts….up 11% down 13%. Tis the market we live in. Thanks for all your great work, every day Walt!
Part of this too, though, is the modern financial media and investors themselves. Everyone wants instantaneous quotes and analysis for our always-on, 24-7 world. I can do that every day because I have copious amounts of spare time and I can be wrong without having some boss somewhere get irritated with me, but I do feel bad for these guys who are kind of, you know, expected to produce real-time authoritative takes that get quoted by major news outlets and can’t be amended once they’re printed. And then investors turn around and get frustrated with them when their on-demand, quick take doesn’t turn out to be exactly right. It’s the same thing with daily macro analysis from the Street. It’s not always (or even most of the time) going to be “correct.” If you read a lot of these quotes they’re totally nebulous because what else are they supposed to say, right? I mean, if the results are out at 4 PM, and it’s 4:07 PM, they don’t have any better information than anyone else.
Great points, sir. This afternoon some old grouch was heard asking his younger coworkers: “what kind of investors are pushing the prices around five minutes after an earnings release?”
AWS growth down to +16% YOY, and slowing more to +11% YOY in April, was a tough spin job for AMZN to make. The pitch, as it were, is that cost “optimization” efforts eventually end, then the reportedly-strong new customer pipeline and all that generative AI business will drive AWS growth back up.
Still, the power of cost cutting was on display. The first 18,000 RIF, and the second 9,000 RIF (including AWS) announced in late March, may not be the last. AMZN still has 1.47 million employees. In my view, AMZN is pretty well set up vs 2Q estimates as well.
AWS is way behind in the Generative AI game. I’m waiting to see if Microsoft can finally capitalize on something and take away AWS customers (haha unlikely!)
As an aside, the Generative AI craze is just as much a thing in the Financial World / Hedge Fund World is it is everywhere else.
April monthly letter (coming this weekend) is all about generative A.I.