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The market is finally remembering that Amazon is part of the Magnificent 7.
Following a blowout earnings report, the stock climbed more than 14 percent after hours to surpass the year-to-date gains of Apple and Meta, leapfrogging both names for the first time in months.
Here’s how Amazon performed in the third quarter:
- Earnings per share: $1.95, beating estimates for $1.57
- Revenue: $180.17 billion, beating estimates for $177.8 billion
Total revenue climbed 13 percent compared to a year ago.
Wall Street was also monitoring the company’s cloud revenue, which saw a 20.2 percent jump in the quarter, as well as revenue from Amazon Web Services, which beat expectations at $33 billion.
AWS, according to CEO Andy Jassy, is growing at its fastest rate since 2022.
He noted that AI demand continues to accelerate, and Amazon continues to work with key partners including Nvidia.
“You’re going to see us continue to be very aggressive in investing in capacity because we see the demand,” Jassy said on the earnings call.
Meanwhile, Amazon’s capital expenditures continued to eat into its balance sheet. Free cash flow fell by more than 60 percent compared to a year ago.
That spending drag however doesn’t explain why Amazon has lagged the rest of the Magnificent 7 this year, given that most of them have equally ambitious capex plans.
Amazon has trailed the group by a landslide since the pandemic and it hasn’t been close.
But if Amazon repeats the quarter it just wrapped up and Wall Street responds with the same enthusiasm, the stock could very well be poised for outperformance.
After all, even the most bearish investors seem likely to come around eventually to a business that’s banking $180 billion in a three month period.
Phil Rosen
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