Amazon will report results for the third quarter after the bell Thursday.
Here’s what analysts are expecting:
Earnings: $1.14 per share expected by LSEG
Revenue: $157.2 billion expected by LSEG
Amazon Web Services: $27.5 billion, according to StreetAccount
Advertising: $14.3 billion, according to StreetAccount
The company warned in its most recent earnings report that sales in the third quarter could take a hit due to the unusually busy news cycle. Amazon CFO Brian Olsavsky said in August that the company observed shoppers were distracted by a combination of world events, including the Paris Olympics and the attempted assassination of former President Donald Trump at a Pennsylvania rally in July.
“Customers only have so much attention,” Olsavsky said at the time, and those factors made it “a tough quarter to forecast.”
Wall Street is projecting revenue growth of roughly 10% during the quarter, which would mark the fifth straight quarter of expansion in the low double digits and a slight deceleration from a year earlier, when sales increased 12.6%.
Earnings are growing much faster, due largely to Amazon CEO Andy Jassy’s widespread cost-cutting efforts. Beginning in 2022 and extending through 2024, Amazon initiated the largest layoffs in its history, cutting more than 27,000 jobs. Jassy has taken a harder line on the company’s unproven, costlier bets than his predecessor, Amazon founder Jeff Bezos.
The company has continued to restructure its teams this year, announcing last week that it would discontinue its Amazon Today rapid delivery service. A small number of employees were laid off as a result, CNBC reported.
Amazon is expected to report operating income of $14.7 billion during the quarter, up more than 31% from a year earlier, according to StreetAccount. The company in August guided for operating income between $11.5 billion and $15 billion.
Wall Street has applauded Jassy’s campaign to rein in expenses, with Amazon shares up about 23% year to date. The Nasdaq has gained roughly 30% over the same stretch.
“I think what’s changed over the last, call it year or two, is the relatively newer CEO has launched off on driving a real amount of operating income and profit margin on the retail business,” Brad Erickson, a senior analyst at RBC Capital Markets, told CNBC’s “Squawk Box” on Wednesday. “And so that is what I think has brought on a whole new group of investors and is keeping a whole new group of investors in this name.”
Amazon and Apple, which also reports quarterly results Thursday, round out a busy week of tech earnings. Google parent Alphabet posted third-quarter earnings that topped expectations, helped by blowout results in its cloud unit. Microsoft and Meta released earnings reports Wednesday.
During the third quarter, Amazon held its annual Prime Day megasale in July. Amazon said it hauled in “record-breaking sales” from Prime Day, though it didn’t disclose specific figures. Online spending in the U.S. climbed 11% year over year to a record $14.2 billion during the promotion event, according to Adobe Analytics data. That was roughly in line with expectations of $14 billion in sales.
Analysts are eager for an update from Amazon executives on the company’s plans for its Project Kuiper satellite internet service. Amazon has said it expects to invest more than $10 billion to build a network of 3,236 satellites in low Earth orbit that will provide high-speed broadband internet services to people around the world who lack such access. Third-party analysts have estimated Amazon may need to shell out up to $20 billion to get the project off the ground, GeekWire reported, citing data from market research firm Quilty Space.
“While there are risks to timing/success of satellite launches and regulatory milestones, the downside is quantifiable, with mgmt guiding to $10B lifetime investment,” said Oppenheimer analyst Jason Helfstein, pointing to the success of SpaceX’s Starlink as an indicator. The firm has an outperform rating on Amazon’s stock.
“We see a significant long-term revenue opportunity, with a target audience >1 billion people,” Helfstein added.
Amazon launched its first two prototype satellites into orbit last October atop a United Launch Alliance rocket. The company postponed its first full-scale Kuiper mission to early 2025 rather than the first half of the year as its rocket provider ULA prioritizes two U.S. Space Force missions.
Amazon will discuss the report on a conference call with analysts at 5 p.m. ET. The press hasn’t received an invitation to a media call typically held with Olsavsky after the company releases its earnings results.
Matt Garman, CEO of Amazon Web Services, speaks during The Wall Street Journal’s Tech Live conference in Laguna Beach, California, on Oct. 21, 2024.
Frederic J. Brown | AFP | Getty Images
Amazon said revenue in its cloud unit increased 19% in the third quarter, just missing analyst estimates.
Revenue at Amazon Web Services totaled $27.45 billion, according to a statement Thursday, while Wall Street was expecting $27.52 billion, based on StreetAccount estimates. Year-over-year growth has accelerated for five consecutive quarters.
The artificial intelligence portion of AWS is in the billions of dollars in annualized revenue, more than doubling year over year, Amazon CEO Andy Jassy, who previously led AWS, said on a call with analysts.
“I believe we have more demand than we could fulfill if we had even more capacity today,” Jassy said. “I think pretty much everyone today has less capacity than they have demand for, and it’s really primarily chips that are the area where companies could use more supply.”
AWS leads the cloud infrastructure market over Google and Microsoft and is an important source of profit for Amazon.
On Tuesday, Google parent Alphabet said revenue from Google Cloud, which includes cloud applications as well as infrastructure, totaled $11.35 billion, up 35%. Microsoft said Wednesday that revenue from Azure and other cloud services grew 33%.
AWS recorded $10.45 billion in operating income, representing 60% of its parent’s profit. Analysts expected $9.15 billion.
The unit’s operating margin came in at 38%, the widest for AWS since at least 2014. Google Cloud reported an operating margin of 17%.
“We’re being very measured in our hiring,” Brian Olsavsky, Amazon’s finance chief, said on the call.
“If this is successful, we would love to find more pieces of their application stack that could run well in AWS and help customers do that,” AWS CEO Matt Garman told CNBC in a September interview.
Also in the quarter, AWS announced plans to discontinue some services, including code-repository tool CodeCommit. Garman told TechCrunch that AWS “can’t invest in everything.”
Amazon’s online advertising business brought in $14.3 billion in the third quarter, up 19% year over year, in line with analysts’ estimates of $14.3 billion.
The Seattle tech giant revealed the financial results of its growing advertising unit as part of its latest earnings report Thursday. Amazon’s overall third-quarter sales were $158.9 billion, ahead of analysts’ estimates of $157.2 billion.
Amazon’s online advertising business is still a fraction of the company’s overall business, but its growth over the years has made it a major competitor to Alphabet and Meta, which lead the digital advertising market. Alphabet’s Google currently represents 27.7% of the worldwide digital advertising market, followed by Meta at 22.8% and Amazon with 8.8%, according to data provided to CNBC by Emarketer.
Meta’s third-quarter advertising revenue came in at $39.9 billion, which was up 19% compared with the year prior. That was slightly ahead of analysts’ expectations of $39.49 billion, according to StreetAccount. Ads accounted for 98.3% of Meta’s overall third-quarter revenue.
Alphabet generated $65.85 billion in third-quarter ad revenue, the company reported Tuesday. That was up 10% from $59.65 billion the year prior. Additionally, advertising sales for the company’s YouTube unit rose 12% year over year to $8.92 billion.
Intel CEO Pat Gelsinger holds an artificial intelligence processor as he speaks during the Computex conference in Taipei, Taiwan, on June 4, 2024.
Annabelle Chih | Bloomberg | Getty Images
Intel shares rose 9% in extended trading on Thursday after the chipmaker reported better-than-expected revenue and issued quarterly guidance that topped estimates.
Here’s how the company did in comparison with LSEG consensus:
Earnings per share: Loss of 46 cents adjusted
Revenue: $13.28 billion vs. $13.02 billion expected
Intel’s revenue declined 6% year over year in the quarter, which ended on Sept. 28, according to a statement. The company registered a net loss of $16.99 billion, or $3.88 per share, compared with net earnings of $310 million, or 7 cents per share, in the same quarter a year ago.
As part of its cost reduction plan, Intel recognized $2.8 billion in restructuring charges during the quarter. There were also $15.9 billion in impairment charges.
Intel has been mired in an extended slump due to market share losses in its core businesses and an inability to crack artificial intelligence. CEO Pat Gelsinger revealed plans during the quarter to turn the company’s foundry business into an independent subsidiary, a move that would enable outside funding options.
CNBC reported that Intel had engaged advisors to defend itself against activist investors. In late September, news surfaced that Qualcomm reached out to Intel about a possible takeover.
The Client Computing Group that sells PC chips recorded $7.33 billion in revenue, down about 7% from a year earlier and below the $7.39 billion consensus among analysts surveyed by StreetAccount.
Revenue from the Data Center and AI segment came to $3.35 billion, which was up about 9% and more than the $3.17 billion consensus from StreetAccount.
Intel called for fiscal third-quarter adjusted earnings of 12 cents per share and revenue between $13.3 billion and $14.3 billion. Analysts had expected 8 cents in adjusted earnings per share and $13.66 billion in revenue.
During the quarter, Intel announced the launch of Xeon 6 server processors and Gaudi artificial intelligence accelerators.
As of Thursday’s close, Intel shares were down about 57% in 2024, while the S&P 500 index had gained 20%.
Executives will discuss the results with analysts on a conference call starting at 5 p.m. ET.
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