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Cloud Service Providers

Amazon Q1 Earnings: Solid Revenue and AWS Growth, But Lower Guidance for Q2

Source:Seeking Alpha

Source:Seeking Alpha

  • Amazon press release (NASDAQ: AMZN): Q1 EPS of $0.98 may not be comparable to consensus of $0.83.
  • Revenue of $143.3B (+12.5% Y/Y) beats by $750M – Positive.
  • AWS segment sales increased 17% year-over-year to $25.0 billion – That’s a good sized growth compared to Google Cloud and Azure since it’s so much bigger.
  • Second Quarter 2024 Guidance
  • Lower guidance – Net sales are expected to be between $144.0 billion and $149.0 billion vs. $150.09B consensus, or to grow between 7% and 11% compared with the second quarter of 2023. This guidance anticipates an unfavorable impact of approximately 60 basis points from foreign exchange rates. In the first quarter of 2024, the impact from Leap Year added approximately 120 basis points to the year-over-year net sales growth rate.
  • Operating income is expected to be between $10.0 billion and $14.0 billion, compared with $7.7 billion in the second quarter of 2023.

The stock is up about 3% to $180, but that’s not even recovered the 4% that it lost in the day.

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Technology

Amazon (AMZN) Analysis: Valuation Insights and Growth Potential

Amazon (AMZN) $173, A little overpriced – Buy below $160 – 3 Year Price Target $210 -245, 12-14% annual return.

Yes, it has become a bit expensive like everything else, but a lot of positives and growth is trending higher for the next 3 years.

There is an important focus on profits, and renewed emphasis on costs. As a result, I can see them growing earnings in the mid thirties to about $7 a share by 2026, so assigning a multiple of 30 to 35 gets us to $210 to $245, with a midpoint of $230.

AWS growth resumed to 14%, and forecasted cloud end-user growth worldwide to around 20%. Plus AWS contracted obligations grew faster than sales – over 25% so that will show up in higher revenues down the road. AWS is currently at a run rate of over $100 Bn, and remains the market leader. If AI has to succeed, the cloud has to play an important role and vital role, you need that kind of processing power.

I also like Anthropic collaboration with Amazon for AI – that could be a big winner down the road.