Amazon Cloud Business Powers Earnings Beat. $208 PT Possible?

Amazon said that it earned an adjusted $1.43 per share on sales of $158.9 billion for the September-ended quarter. It came in better that the adjusted earnings of $1.14 per share on sales of $157.3 billion expected by analysts.

For the current quarter, Amazon guided for sales of $185 billion at the midpoint of its range. It came in within the target by analyst at $186.3 billion in December-quarter sales. But the company's guidance for operating income of $18 billion easily bested the $17.3 billion analysts were looking for, according to FactSet consensus.

Amazon lost 3.28% in Thursday (31 Oct) regular trading but rallied more than 5% to $195 at time of writing in after-hour trading.

Amazon was trading lower for much of Thursday session before its earning results as analysts gave a weak sales forecast after Microsoft late Wednesday earnings which is Amazon Web Services rival, but if you looked at my previous article, you would see that Amazon led in terms of cloud market share.

AWS revenue did come in slightly lower than anticipated, with $27.45 billion in sales compared with estimates of $27.5 billion. But the $10.4 billion in operating income from the profit-driving cloud business exceeded expectations of $9.1 billion.

Analysts have been debating how long Amazon can continue the steady improvement to its profitability seen under Chief Executive Andy Jassy. After all, the company is spending billions on chips and new data centers to power its AI ambitions. It is also ramping up spending on its Project Kuiper satellite internet initiative. Amazon stock is still trading below highs reached in early July.

Even in spite of (third-party) and AWS results, the company saw a big beat on earnings before interest and taxes, with AWS the primary driver and, to a lesser degree,

Amazon's retail-focused North America division also exceeded operating income expectations, growing 32% to $5.7 billion, ahead of estimates for $5.4 billion. The North America segment includes sprawling e-commerce operations, Amazon's advertising and seller services business, as well as Project Kuiper satellite internet business.

Amazon’s upbeat results could signal a better-than-feared holiday season for retailers, who have been bracing for the slowest pace of holiday sales growth in six years. Three months ago, Amazon executives warned that consumers were “cautious with their spending” and seeking less-expensive options.

The company faces heightened competition from discount retailers such as Shein and Temu, which sell a wide range of goods at bargain-basement prices sent directly from China.

Amazon reported a 7% improvement in retail sales in the quarter ended Sept. 30 to $61.41 billion.

Multi-timeframe (MTF) is giving a strong uptrend, so can we see Amazon going back to its highs in July?

If we looked at how Amazon have moved after its earnings, it has come out of the lower band in supertrend, and if we could see Amazon clear $199 today (01 Nov) after its earnings result, we might be seeing a new price target at $206 to $208.

What could be in investors mind would be the return on AI investment, can these investment continue to make money for Amazon?

I would think Amazon AI services should be gaining traction and this should put them in a good stead for higher stock price.

I am expecting Amazon to make upside movement after their stellar earnings result, this result have given us which cloud providers is the winner, Google is Amazon closest rival, Microsoft still have some room to run.

I will be monitoring Amazon closely as I might sell some of my position if it hits $208.

Appreciate if you could share your thoughts in the comment section whether you think Amazon would continue to make upside movement towards a new highs of $208.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.