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Double A
Large numbers. (Loud noises.)
Amazon ran up $158.9 billion in sales during Q3, results released after the bell on Wall Street Thursday showed. That was ahead of expectations. Consensus was looking for $157.29 billon from Andy Jassy on the top-line.
Sales growth was 11% last quarter, up from Q2's pace.
The guide looked a bit light. Taking the midpoint ($185 billion), sales growth would be 8.8% in Q4. The Street was looking for $186.36 billion in current quarter sales, or 9.6% growth.
I'm no
Don’t forget that Apples “services” revenue numbers include the estimated $20 billion per year Placement Fee from Google. That will likely be lost thanks to the anti-trust case against Google.
Imagine what AAPL’s Services margin looks like without $20BN in presumably all-margin payola. I think investors are largely disregarding the antitrust risks to GOOG and the knock-on effects to AAPL. Sure, GOOG price has probably been held back by antitrust, but if even 50% of the potential remedies were “in the price”, the price would, I think, be a lot lower.
Growth in AMZN’s businesses varies from +HSD to almost 20%, and the two highest-growth biz are the highest-margin, namely AWS and advertising. The margin improvement at AWS (3Q22 EBIT margin 26%, 3Q23 30%, 3Q24 38%) is impressive considering AI revenue is growing “triple-digit” (the re-acceleration in AWS over the past year looks entirely down to AI) with, currently, lower margin than non-AI. In growth and margin improvement, AWS looks better than MSFT Cloud, hence MSFT talking about the “superior quality” of its AI revenue. AMZN NorthAmerica and International are also growing EBIT margins, the former should crack into double-digits this year.
For most of its existence, AMZN was a growth story that investors hoped would eventually become a profit story, but we remember how dismissive Bezos always sounded about profit. Jassy seemed more profit-focused but has been busy building chasing pandemic growth, cutting costs post-pandemic, now chasing AI growth. Investors still expect profits to hockey-stick. From 2019 to 2023, AMZN grew FCF about +65%. From 2024 to 2028, consensus has AMZN growing FCF 3X, to $150BN/yr. Quarters like 3Q, with growth and rising margins, are better than quarters with higher growth but less margin progress, to me anyway.
Oooohh, Brian Williams?!
Based on the report that the sales of new Kindles are “significantly outperforming” expectations, maybe there is hope, yet, that Americans will spend more time reading and less time on social media. That would be a very good thing for our country! 🙂
H needs a Kindle Edition!
Through yesterday (10/31), 52% by name and 45% by cap of the S&P500 have reported 3Q, 59% and 63% beat consensus revenues, 77% and 85% beat cons EPS, 49% and 59% saw 4Q revenue cons go up, 35% and 43% saw cons EPS go up, and 0% and 1% saw stock price go up on reporting. Feels like a flattish quarter for revisions. I suppose I should track further-out revisions, like next 4 quarters.
Loving the color John, keep it up.