After another busy day of earnings reports, Amazon's results received mixed reactions from investors. The company impressed by surpassing EPS estimates and showing strong growth in its cloud services. However, lower-than-expected revenues and weak guidance have caused the stock to fall.
Amazon reported $148 billion in revenue, representing a 10% year-over-year increase but falling just short of analyst estimates of $148.7 billion. Despite the revenue shortfall, Amazon's EPS (earnings per share) rose 94% year-over-year to $1.26 per share, exceeding expectations of $1.03.
Investors closely watched the performance of Amazon Web Services (AWS), especially after both Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOG) reported double-digit growth in their respective cloud divisions. AWS delivered impressive results with a 19% year-over-year increase to $26.3 billion in revenue, surpassing estimates of $26 billion.
Capital spending surged to $16.4 billion for Q2, marking a 58% increase from the same quarter last year. On the earnings call, Amazon CEO Andy Jassy explained the increased capital expenditures by stating, “We’re investing a lot into AI,” and added that the company is “very bullish” on AI’s medium-to-long-term outlook.
The company also provided weaker-than-expected guidance, projecting Q3 revenues to be between $154 billion and $158.50 billion, slightly below previous estimates of $158.33 billion. Year-to-date, Amazon stock is up 21% and has an average price target of $223.28, suggesting over 30% upside potential. Despite this, Amazon's stock fell nearly 8% after hours following the earnings call.
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