Amazon shares rally after strong second quarter and guidance

Key points

  • Amazon shares rose 12% on Friday, a day after the company posted better-than-expected second-quarter revenue and provided solid guidance for the current quarter.
  • Amazon and Apple reported upbeat results in an otherwise disappointing earnings season for tech companies.

Amazon shares rose more than 12% on Friday, a day after the company posted stronger-than-expected second-quarter revenue and delivered upbeat guidance.

Sales rose 7% to $121.23 billion for the three months ended June, exceeding Wall Street’s estimated $119.09 billion. This represented Amazon’s third straight quarter of single-digit annual revenue growth.

Amazon’s third-quarter forecast suggested that growth could pick up again to between 13% and 17%. The company said it anticipates revenue of $125 billion to $130 billion for the quarter, while analysts were expecting sales of $126.4 billion, according to Refinitiv.

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Amazon and Apple reported upbeat results in an otherwise disappointing earnings season for tech companies. Facebook parent Meta, Alphabet and Microsoft all reported disappointing results for the quarter, as decades of high inflation, rising interest rates and other macroeconomic pressures weighed on their businesses.

Wall Street hailed Amazon’s earnings report, with one analyst calling the e-commerce giant “a port in a macro storm” as it faces several headwinds challenging its tech peers so far .

“All in all, Amazon delivered a very clean 2Q earnings call to investors, amid extreme macro-related earnings volatility in tech,” analysts at Deutsche Bank led by Lee Horowitz wrote in a note to clients on Friday. The firm, which maintains a buy rating on Amazon shares, raised its price target from $155 to $175.

Several analysts said the results indicated Amazon was making progress on the cost headwinds that have weighed on the company in recent quarters. Amazon has faced high costs related to labor, supply chain, energy and transportation, as well as the Covid-19 pandemic, among other factors. CEO Andy Jesse said Thursday that the company continues to work through “more controllable costs.”

“With a successful 2-day Prime Day event in July and MGMT [management] discussing eventual demand concerns across our core businesses, we see a strong revenue growth in Amazon 2H′22 [second half of 2022] The narrative is well positioned to form, analysts at Goldman Sachs led by Eric Sheridan said in a research note Friday. The firm kept its buy rating on the shares.

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