Amazon stock jumps on Q3 topline beat, record margins

Amazon.com Inc (NASDAQ:AMZN ) reported third-quarter earnings that surpassed analyst estimates, driving its stock over 6% in premarket trading Friday despite issuing lower-than-expected guidance for the upcoming quarter.

The e-commerce and cloud computing giant posted adjusted earnings per share of $1.43, beating the analyst consensus of $1.14 by $0.29. Revenue for the quarter came in at $158.9 billion, topping estimates of $157.25 billion and marking an 11% increase YoY.

The operating income (OI) for the quarter came in at $17.4 billion, well ahead of $15 billion - $16 billion expectations.

Barclays analysts said above-consensus revenue and OI "should be a significant relief to Amazon bulls after a couple quarters of sequentially declining retail operating margin."

Amazon's cloud division, AWS, saw its sales increase 19% YoY to $27.5 billion, however, this was short of bullish expectations. The North America segment saw sales rise 9% to $95.5 billion, while International segment sales grew 12% to $35.9 billion.

Moreover, the company's overall operating margin rose to 11%, its highest ever. AWS margins stood at 38%, also a new high.

"We think this print could go a long way to restoring the bull spirits around AMZN shares which have lagged mega cap peers all year," Barclays analysts added. 

Looking ahead, Amazon's fourth-quarter revenue guidance of $181.5-188.5 billion fell short of the $186.36 billion analyst consensus at the midpoint. The company expects operating income between $16.0 billion and $20.0 billion for Q4.

Despite the slight miss, Bernstein analysts led by Mark Shmulik said they "remain constructive" on AMZN's fourth-quarter topline "as we expect AWS and Advertising to accelerate into year-end."

The company highlighted its continued investment in AI capabilities, including the expansion of its generative AI shopping assistant, Rufus, to several new countries and the launch of new AI-powered features for sellers and advertisers.

"As we get into the holiday season, we're excited about what we have in store for customers," said Andy Jassy, Amazon President & CEO. "We kicked off the holiday season with our biggest-ever Prime Big Deal Days and the launch of an all-new Kindle lineup that is significantly outperforming our expectations."

Senad Karaahmetovic contributed to this report. 

Source: Investing.com