【Financial Results Preview】Amazon, AWS and advertising are drawing a new growth curve. What about the shareholder return strategy?

arerevenueThe semiconductor manufacturing equipment related to technologies like lasers is strong, with a psychological improvement due to the recovery of NVIDIA's stock in the U.S.157.2 billion 51 million dollars, up 9.9% from the previous year.、Earnings Per Share (EPS)The semiconductor manufacturing equipment related to technologies like lasers is strong, with a psychological improvement due to the recovery of NVIDIA's stock in the U.S.Expected to increase by 21.27% from the previous year to 1.14 dollars.Market is AWSandHigh profit growth in the advertising business.Amazon is expected to demonstrate long-term growth potential due to its high profit growth in the advertising business, whilethe retail businessis expected to face challenges such as rising costs and macroeconomic uncertainties.

As of October 30, Amazonhas risen by approximately 25% year-to-dateand is performing at a median level among the "M7" mega-cap stocks in the US, nearly in line with the S&P500 index.

Amazon is mainlyexperiencing high growth with two main engines: advertising and AWS.These are expected to continue to expand their scale in the future, with their share of total revenue expected to increase significantly.

AWS is Amazon's cloud computing business and one of the most profitable divisions within the company.In the second quarter, AWS, after experiencing 7 consecutive quarters of decline due to customers being forced to cut costs in a challenging environment,achieved recovery for the third consecutive quarter.。

However,AWS is also facing significant competitive pressure.Microsoft's Azure has built a significant advantage in the enterprise AI application market through deep collaboration with OpenAI. Google Cloud, leveraging the BigQuery data analysis and machine learning tools, is gaining support from specific customer segments. Furthermore, an increasing number of companies are opting for a multi-cloud strategy to reduce dependency on a single cloud service provider, challenging AWS's market share.

The advertising business at Amazon has been one of the fastest-growing businesses in recent years.Advertising revenue reached $12.8 billion in the second quarter of 2024, accounting for approximately 9% of the company's total revenue, with a growth rate of 20%. Although the growth rate has slightly slowed down from the 24% in the first quarter (year-on-year), it is still the fastest-growing sector. The rapid rise of the company's advertising business is supported by integrating consumer purchase data.Advertisers can accurately target customers.One of the reasons behind the rapid rise of the company's advertising business is the integration of consumer purchase data.and Helping advertisers accurately identify target customers.leading to Improved the return on advertising spend.There are times when this happens.

In particular, the introduction of Prime Video has provided Amazon's advertising business with a new growth driver.In 2024, Amazon will introduce advertising on Prime Video, targeting approximately 0.18 billion users in the USA. As more Prime members choose Prime Video as their main streaming platform for watching ad-supported content, this will become an important source of revenue for Amazon.It may become an important source of revenue for Amazon.As the proportion of advertising revenue to total revenue could increase further.

According to Bloomberg analysts, the advertising business in the third quarter grew by 18.2% to reach 14.2 billion dollars.Despite headwinds, Amazon's retail businessare predicted.

Amazon's retail business isThe company's main source of revenueaccounts for approximately 65% of total revenueHowever, unlike AWS and advertising businesses that boast high profit margins, the profitability of the retail business is facing various challenges.In particular, the impact of labor costs and the uncertainty of the macroeconomy is significant. In September 2024, Amazon announced a $1.5 hourly wage increase for about 0.8 million employees in the USA, raising the average hourly wage to $22.facing challenges due to the rising labor costs, especially in the face of regulatory pressures.However, the profitability of the retail business is facing various challenges. In particular, the impact of rising labor costs and the uncertainty of the macroeconomy is significant. In September 2024, Amazon announced a $1.5 hourly wage increase for about 0.8 million employees in the USA, raising the average hourly wage to $22. rising labor costsespecially amid facing regulatory pressuresThese are putting pressure on the company's operating profit.At the same time, Amazon's retail business is facing uncertainties in consumer demand.Facing uncertainties in consumer demand.Due to the instability of the macroeconomic environment, consumer spending has been restrained, leading to a decline in Amazon's average selling price (ASP).This has led to lower-than-expected revenue in the second quarter of the company, and management anticipates continued weakening consumer demand in the third quarter, as shoppers become increasingly cautious.Potential continued weakening of consumer demand in the third quarter amid increasing caution among shoppers.Potential continued weakening of consumer demand in the third quarter amid increasing caution among shoppers.And warned.

Bloomberg analysts expect the retail business to achieve a year-on-year growth rate of 4.15% in the third quarter.with revenue reaching $59.6 billion.And predict.

Regarding capital expenditures, Amazonwill continue to increase investment in artificial intelligence (ai)due to the increasing demand for AWS services and AI tools, Amazon's capital expenditures for the first half of this yearexceeded $30 billion.The management team,expects further increase in capital expenditure in the second half of the year,with a large portion of the expenditure allocated to AWS infrastructure, especially in the field of artificial intelligence. Analysts predict that Amazon's AI projects will generate billions of dollars in revenue over the next few years.

Amazon recently announced investments in the nuclear power sector, signing three related contracts at once and investing over 0.5 billion dollars.

Although there are concerns about the profit margin and performance outlook of the retail business,Jefferies has not changed its optimistic outlook on Amazon's medium-term prospects, especially its exposure to cloud demand leveraging artificial intelligence.They say, AWS growthandThe opportunity for that profit marginis a key reason for owning Amazon shares. Furthermore, as the normalization of consumer goods demand progresses,there is also a possibility of a reacceleration of retail profit margins in the second half of 2025.stated that they see as well, Amazon'starget stock price at $225 and maintained a 'bullish' rating.。