Amazon reports softer sales, shares fall nearly 8%

Amazon shares are down 7.9% after earnings.

Amazon (AMZN) reported its Q2 2023 earnings after the bell on Thursday and they’re a mixed bag:

• EPS: $1.26 vs $1.04 expected
• Revenue: $147.98B vs $148.78B expected
• AWS net sales: $26.28B vs $25.98B expected

Key takeaways:

• Strong bottom line performance with EPS beating estimates by $0.22
• Revenue slightly missed expectations, coming in $800M below forecast
• AWS continues to show robust growth, up 19% YoY to $26.3B

Amazon highlighted “continuing progress on continued reacceleration in AWS growth” and improvements “on a number of dimensions.” The e-commerce giant’s cloud division outperformed expectations, suggesting potential market share gains in the competitive cloud space.

Q3 outlook:

• Net sales: $154B – $158.5B
• Operating income: $11.5B – $15B

Why the selloff?

1. Revenue miss: Even though slight, any miss can spook investors in the current market.
2. Potential growth concerns: The market may be pricing in slower growth expectations.
3. High expectations: AMZN shares have had a strong run in 2023, setting a high bar for earnings.
4. Profit-taking: Some investors might be using the mixed results as an opportunity to lock in gains.

On a second look, the solid earnings beat and positive AWS performance could provide support for AMZN shares in after-hours trading, despite the revenue miss.

Watch for analyst reactions and any comments on AI initiatives, which could be key drivers for future growth.

This article was written by Adam Button at www.forexlive.com.