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Amazon gives Wall Street mixed financial picture in earnings report
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Amazon delivered a mixed quarterly earnings report on Thursday, pairing strong cloud growth with a cautious holiday forecast and third-quarter results below Wall Street expectations. The Seattle-based company expects fourth-quarter net sales of $240bn to $247bn, a 12% to 16% annual increase. Analysts had expected $244.16bn.
For the quarter ended September 30, Amazon reported net income of $20.69bn, or $1.89 per share, down from $21.19bn, or $1.95 per share, a year earlier. Sales rose to $201.94bn from $180.17bn. Analysts polled by FactSet expected $1.97 per share on sales of $202.2bn.
Amazon Web Services sales rose 39.3%, up from 37% in the previous quarter and the fastest growth in nearly five years. Still, shares fell more than 6% in after-market trading as investors focused on the core business. Amazon plans to hire 300,000 US seasonal workers, up from 250,000 last year.
Investors are watching whether Amazon's heavy artificial intelligence spending is paying off. CEO Andy Jassy said in July that capital spending, mostly on AI, would total $220bn this fiscal year, including robots, semiconductors and satellites. That is up from $200bn announced in February and $128bn last year, with Jassy citing higher memory-chip costs. He said Amazon still lacks enough capacity to meet customer demand.
Broader AI concerns also intensified after Alphabet reported weaker summer growth and higher cash burn late Wednesday. Alphabet's property and equipment purchases topped $51bn, and its stock plunged Thursday, erasing half a trillion dollars in market value. Such worries are weighing on the AI industry after a costly data-center buildout.
The results underscore the tension between Amazon's cloud momentum and its expensive AI buildout. The cautious holiday outlook may test investor patience as seasonal hiring increases. How well Amazon converts AI spending into capacity and profit will shape its near-term outlook.
