Amazon earnings live updates: Stock up after hours as company reports revenue, EPS beats

Jassy didn't say much about the state of the consumer, but he did say Amazon's "speed of delivery" offers significant advantages to customers.

"The faster that we're able to promise customers that we can get them their items, the more frequently they buy," Jassy said. "And then more they actually use Amazon for their shopping needs."

Amazon said some consumers are trading down and orders of everyday essentials are growing.

Those everyday essentials "are really predicated on speed." he said.

Amazon gave a peek at its key capex plans. It expects to spend about $75 billion in 2024 and more than that in 2025. Jassy the said majority of that spending in 2025 will be for AWS.

"The increased bumps here are really driven by generative AI, as I was mentioning my own opening comments," Jassy said.

Jassy said that AI "is a really unusually large, maybe once in a lifetime type of opportunity," but "customers, the business and our shareholders will feel good about this long term."

"I think we've proven over time, that we can drive enough operating income and free cash flow to make this a very successful return on invested capital business," Jassy said. "And we expect the same thing will happen here with generative AI."

Paid membership growth accelerated in the third quarter in the US and internationally, Amazon CFO Brian T. Olsavsky said in the call.

As of March, the share of US consumers who have Amazon Prime was about 75%, Bloomberg reported.

Jassy said new Kindle sales "significantly outperformed" expectations.

"Kindle is having an excellent year with customers reading more than ever," Jassy said. "We now have over 20 billion average monthly pages read on Kindle devices worldwide."

Amazon's AI business is a "multi billion dollar business that's growing triple digit percentages year over year," Jassy says. It's "growing three times faster at its stage of evolution than AWS did itself."

Jassy also says that while the company has a "deep partnership" with Nvidia, customers want better price performance for AI workloads.

Jassy says the company is seeing "significant interest" in its custom silicon chips.

Jassy mentions a number of its own AI offerings including the expansion of Amazon's shopping assistant Rufus, AI shopping guides, and Project Amelia.

"We're seeing meaningful growth in a very large base," Jassy said.

"We see further opportunity in driving even better performance for advertisers, further improving the relevancy of the ads we show, and by providing additional optimization controls."

Amazon's head of IR kicks off the call before handing it over to Andy Jassy, who recaps the earnings report.

"As always, we're focused on making our customers' lives better and easier and thinking long-term with respect to how we can keep helping customers and build a successful business," Jassy said.

Truist Securities said in a note to investors that Amazon is expected to discuss four key topics during the call: the health of the consumer leading up to the holidays, AWS headed into the fourth quarter and fiscal year 2025, North America and international operating margins, and management's thoughts on capital expenditures heading into 2025.

Amazon CEO Andy Jassy highlighted the company's October Prime Days in the report.

"We kicked off the holiday season with our biggest-ever Prime Big Deal Days and the launch of an all-new Kindle lineup that is significantly outperforming our expectations," he said, saying the company is excited about what's in store for customers during the key holiday shopping period.

"Amazon continues to be the primary beneficiary of the US consumer's shift to online shopping and a healthy Prime Day helped boost revenues for the retail and ad businesses," EMARKETER analyst Canaves said.

He also said Amazon would share information about "over 100 new cloud infrastructure and AI capabilities" at an AWS re:Invent event the week after Thanksgiving.

EMARKETER principal analyst Sky Canaves told BI Amazon beat expectations "on the strength of the three pillars of its business: ecommerce, advertising, and cloud services."

While Amazon has had to increase AI-related spending, Canaves said it is in a good spot since its been steadily growing "AWS capacity and faces fewer constraints."

3rd quarter

• Net sales: $158.88 billion, +11% y/y, estimate $157.29 billion

  • Online stores net sales: $61.41 billion, +7.2% y/y, estimate $59.64 billion
  • Physical Stores net sales: $5.23 billion, +5.4% y/y, estimate $5.17 billion
  • Third-Party Seller Services net sales: $37.86 billion, +10% y/y, estimate $38.22 billion
  • Subscription Services net sales: $11.28 billion, +11% y/y, estimate $11.17 billion
  • AWS net sales: $27.45 billion, +19% y/y, estimate $27.49 billion
  • North America net sales: $95.54 billion, +8.7% y/y, estimate $95.22 billion
  • International net sales: $35.89 billion, +12% y/y, estimate $34.55 billion
• Third-party seller services net sales excluding F/X: +10% vs. +18% y/y, estimate +11.8%
• Subscription services net sales excluding F/X: +11% vs. +13% y/y, estimate +9.86%
• Amazon Web Services net sales excluding F/X: +19% vs. +12% y/y, estimate +19.2%
• EPS: $1.43 vs. $1.26 q/q, estimate $1.16

• Operating income: $17.41 billion, +56% y/y, estimate $14.75 billion

  • Operating margin: 11% vs. 7.8% y/y, estimate 9.34%
  • North America operating margin: +5.9% vs. +4.9% y/y, estimate +5.58%

4th quarter

• Sees net sales: $181.5 billion to $188.5 billion, estimate $186.36 billion
• Sees operating income: $16.0 billion to $20.0 billion, estimate $17.49 billion

Source: Bloomberg

Amazon fell as much as 3.9% on Thursday and was trading 3.5% lower as of 3:25 p.m. in New York.

Morgan Stanley suggested that investors stick with Amazon, even if the firm's fourth-quarter guidance might disappoint.

Analysts led by Brian Nowak suggested that the company's outlook regarding earnings before interest and taxes could underwhelm investors, given ongoing retail-side pressures.

"We see AMZN's high and growing focus on lower-priced, lower-margin essentials driving merchandise margin pressure... which is holding back the near-term slope of its N. America retail profit ramp. Expected discounting in a competitive holiday season (and picky discretionary consumer) create further near-term uncertainty," they said.

The bank expects fourth-quarter EBIT of around $17.5 billion, 1% below consensus expectations. This could create some weakness in the stock.

However, Morgan Stanley is treating that as an opportunity to buy, as 2025 will unleash multiple profit drivers. That includes Amazon's transition into high-margin ad revenue, as well as upcoming corporate and shipping efficiencies.

As with Wedbush Securities, Morgan Stanley doesn't project a meaningful profit impact from Amazon's latest investments, such as Project Kuiper.

The bank holds a $210 price target, indicating 13% upside ahead.

Wedbush Securities sees two key reasons to celebrate Amazon over the long term: its expanding cloud platform and a revenue shift toward high-margin advertising.

"We think the risk/reward is attractive heading into results as investor expectations for 2H profitability have moderated, AWS growth continues to accelerate, and advertising momentum is building into 2025," a team of analysts led by Scott Devitt wrote.

Alongside growing cost efficiencies and Amazon's broadening supply chain, AWS and ad revenue will lead significant margin expansion over the next five years. According to Wedbush, investors should take advantage of today's relative underperformance.

Instead, Wall Street has pulled back profit expectations amid near-term uncertainty related to Amazon's newest investments, the firm noted.

But while initiatives such as Project Kuiper — Amazon's plan to deploy thousands of satellites — may add on costs, Wedbush doesn't expect these to have a meaningful impact on the upcoming results.

The firm reiterated its "outperform" rating and $225 price target, implying a 20% increase from current levels.

Amazon's third-quarter results will be a mixed bag as consensus revenue estimates are too high, says Bank of America.

BofA's Justin Post expects revenue to underwhelm at $157 billion, but predicts that investors underestimate Amazon's operating profits, which should reach $15 billion.

The analyst cited AI-driven cloud demand as a top reason to hold Amazon, and noted that accelerating AWS growth might surprise Wall Street.

"AI demand likely improved further in 3Q, and we think investors may be expecting 20% y/y growth for 3Q, which would suggest the largest 3Q in terms of sequential dollars added at $1.39bn," Post said.

While shifts in consumer spending will remain in place, retail margin growth could reaccelerate in the second half of 2025.

The firm has a "buy" rating on the stock and a $210 price target, which implies a nearly 13% gain from current levels.

CFRA analyst Arun Sundaram is cautious about Amazon's near-term trajectory, even if the company has compelling prospects over the long run.

The firm expects Amazon to notch a "modest" earnings beat after the bell: it predicts revenue to rise 10.5% year-over-year and GAAP operating profit to climb 36%.

While AWS and advertising momentum work in Amazon's favor, Sundaram will monitor how the firm's other investments affect profits.

Though growth in other parts of Amazon's business should cover these investments, CFRA expects profits to expand more moderately into 2025.

CFRA also cited that Amazon is experiencing a tepid spending environment as consumers shift to lower-priced products.

The company trimmed its Amazon price target to $219 a share on October 21, indicating 17% upside ahead.

JPMorgan highlighted Amazon Web Services, the firm's cloud computing system, as a chief reason to stay bullish on the stock.

AWS will continue accelerating through 2025, aided by optimizations, new workload migrations, and Amazon's growing monetization of artificial intelligence. The bank predicts AWS grew 21% year over year, surpassing Wall Street expectations.

JPMorgan expects third-quarter net sales to reach $157 billion, falling under consensus estimates of $157.3 billion.

Retail profits were likely pressured in the last quarter amid spending headwinds, including Prime Day discounts. According to the bank, consumers have turned cautious on discretionary items, while indicating a preference for deals. Together, these factors have depressed Amazon's average selling prices.

JPMorgan has an "overweight" rating on Amazon and a $230 price target. This suggests nearly 23% upside from current levels.

3rd quarter

• Net sales estimate: $157.29 billion

  • Online stores net sales estimate: $59.64 billion
  • Physical Stores net sales estimate: $5.17 billion
  • Third-Party Seller Services net sales estimate: $38.22 billion
  • Subscription Services net sales estimate: $11.17 billion
  • AWS net sales estimate: $27.49 billion
  • North America net sales estimate: $95.22 billion
  • International net sales estimate: $34.55 billion
• Third-party seller services net sales excluding F/X estimate: +11.8%
• Subscription services net sales excluding F/X estimate: +9.86%
• Amazon Web Services net sales excluding F/X estimate: +19.2%
• EPS estimate: $1.16

• Operating income estimate: $14.75 billion

  • Operating margin estimate: 9.34%
  • North America operating margin estimate: +5.58%
  • International operating margin estimate: 1.23%
• Fulfillment expense estimate: $24.35 billion
• Seller unit mix estimate: 60.8%

4th quarter

• Net sales estimate: $186.36 billion
• Operating income estimate: $17.49 billion