Amazon Shares Jump After Third-Quarter Revenue Growth and Record Profitability By Investing.com

Amazon.com Inc (NASDAQ:) reported third-quarter earnings that beat analysts’ estimates, sending its shares up more than 6% in pre-market trading on Friday despite lower-than-expected guidance for the coming quarter.

The e-commerce and cloud computing giant reported adjusted earnings per share of $1.43, beating analysts’ consensus estimate of $1.14 by $0.29. Revenue for the quarter was $158.9 billion, beating estimates of $157.25 billion and up 11% year over year.

Operating income (OI) for the quarter was $17.4 billion, well above expectations of $15-16 billion.

Barclays (LON:) Analysts said the above-consensus revenue and OI “should come as a significant relief to Amazon bulls after a couple of quarters of sequential declines in retail operating margins.”

Amazon’s cloud unit AWS grew sales 19% year over year to $27.5 billion, but fell short of bullish expectations. In the North America segment, sales increased 9% to $95.5 billion, and international segment sales increased 12% to $35.9 billion.

Moreover, the company’s overall operating margin rose to 11%, its highest ever. AWS margin was 38%, also a new high.

“We think this report could play an important role in restoring bullish sentiment around AMZN shares, which have underperformed mega-cap peers all year,” Barclays analysts added.

Looking ahead, Amazon’s fourth-quarter revenue forecast of $181.5 billion to $188.5 billion missed the analyst consensus of $186.36 billion at the midpoint. The company expects fourth-quarter operating income to be between $16.0 billion and $20.0 billion.

Despite the slight miss, Bernstein analysts led by Mark Shmulik said they “remain constructive” on AMZN’s fourth-quarter financial performance “as we expect AWS and advertising to accelerate toward the end of the year.”

The company highlighted that it continues to invest in artificial intelligence capabilities, including expanding its generative AI shopping assistant Rufus into several new countries and launching new AI-powered features for merchants and advertisers.

“As we head into the holiday season, we’re excited about what we have in store for customers,” said Andy Jassy, ​​Amazon president and CEO. “We kicked off the holiday season with our largest-ever Prime Big Deal days and the launch of an all-new Kindle line that far exceeded our expectations.”

Senad Karaakhmetovich contributed to this report.