Amazon Shares Dip 8% Despite Surpassing Q2 Earnings Predictions
Amazon shares took an 8% dive on Friday, in the wake of the company’s second-quarter earnings report. This occurred despite the fact that Amazon outperformed Wall Street’s expectations in terms of both revenue and earnings per share. The e-commerce behemoth reported Q2 revenue of $167.7 billion and earnings of $1.68 per share, exceeding analyst predictions. However, investor apprehension regarding future profitability persisted.
The primary source of concern revolved around Amazon Web Services (AWS), which saw an 18% year-over-year growth to $30.87 billion in revenue. This growth rate lags behind that of competitors Microsoft and Google’s cloud divisions. The AWS operating income of $10.2 billion also fell short of the $10.9 billion analyst estimate, raising doubts about the cloud unit’s competitive standing in the AI race.
During the earnings call, CEO Andy Jassy attempted to assuage investor fears by emphasizing AWS’s market leadership and continuous AI investments. Amazon is pledging up to $100 billion this year towards AI infrastructure and data center expansion. The company also increased its third-quarter revenue guidance. However, the weaker-than-expected operating income forecast has unnerved investors who are keeping a close eye on returns from AI spending.
Source: CNBC