Amazon (AMZN, Financial) saw a significant 7% increase in its stock price after announcing a robust EPS beat for Q3. This marks its largest EPS gain since Q3 2023. Operating income surged 56% year-over-year to $17.41 billion, surpassing the upper limit of its previous guidance of $11.5-15.0 billion. Revenue climbed 11% year-over-year to $158.88 billion, also exceeding the high end of the guidance range of $154.00-158.50 billion.
- Despite concerns about a shorter holiday season, Amazon projected total Q4 revenue to align with expectations at $181.50-188.50 billion and forecasted healthy operating income of $16-20 billion. The company remains optimistic about the holiday season's start.
- In the Stores segment, North American growth was 9%, while international growth reached 12%. Amazon continues to reduce prices and expedite shipping, resonating with consumers and resulting in strong unit growth, surpassing revenue growth. July's Prime Day was the largest and most successful to date.
- AWS segment sales rose 19% year-over-year to $27.5 billion, maintaining the rapid growth seen in Q2. Sales growth has accelerated over the past four quarters, with more enterprises expanding their cloud presence. AWS has released nearly twice as many machine learning and GenAI features as competitors in the past 18 months, with its AI business now a multi-billion-dollar venture growing at triple digits.
- Advertising Services revenue increased 19% to $14.33 billion, slightly below previous quarters due to its expanding base. Advertising remains a key profitability driver in North America and international markets, with Amazon seeing further expansion opportunities in its ads offering.
Overall, Amazon's Q3 report has been well-received by investors. While there is a slight deceleration in the ads segment, the growth in Stores and AWS, along with substantial EPS and operating income gains, highlight a strong performance. Concerns about the condensed holiday season have been alleviated.
