What We Learned From Amazon's Latest Quarterly Update

Amazon (AMZN) shares tumbled Friday, a time aft nan institution posted second-quarter gross that missed estimates and nan company's guidance for nan 3rd 4th fell short of what analysts had expected.

While a number of analysts lowered their value targets for Amazon pursuing nan company's net report, they remained bullish connected nan company's outlook, anticipating maturation from Amazon Web Services (AWS) and separator betterment for Amazon's unit business.

Retail Growth Pressured arsenic Consumers Hunt for Value

Amazon CFO Brian Olsavsky said successful Tuesday's net telephone that Amazon has seen consumers beryllium "careful pinch their spend" and look for nan lowest-cost options, putting unit connected maturation of Amazon's unit segment.

A number of Amazon's competitors for illustration Target (TGT) and Walmart (WMT) person besides noted successful caller net calls earlier this twelvemonth that discretionary spending has fallen arsenic inflationary pressures weighed connected consumers.

Still, margins successful Amazon's unit conception could guidelines to use from steps Amazon is taking to amended its transportation web and little costs, according to Bank of America analysts. Efforts to amended nan customer acquisition "reducing clash for shoppers" could besides thief Amazon summation marketplace share, Jefferies analysts said.

AWS Poised To Fuel Growth successful Second Half With Cloud, AI Demand

AWS was a cardinal driver of maturation successful nan 2nd quarter, pinch Amazon reporting a 19% jump successful AWS gross year-over-year. Analysts said they expect that inclination could proceed successful nan 2nd half of nan twelvemonth arsenic request rises for nan unreality retention and artificial intelligence (AI)-related services from AWS.

JPMorgan, Wedbush, and Jefferies analysts projected AWS gross maturation of betwixt 19% and 21% year-over-year successful nan 3rd and 4th quarters of 2024.

Amazon CEO Andy Jassy said Thursday that AWS has released "more than doubly arsenic galore instrumentality learning and generative AI features" than different awesome unreality providers combined.

Amazon shares were down astir 10% to $166.42 arsenic of 3 p.m. ET Friday, though moreover pinch Friday's losses, they've gained complete 9% since nan commencement of nan year.