Shares of the e-commerce beast surged more than 7% on early Friday, after reporting above consensus earnings on Thursday, and supported by bullish comments around artificial intelligence.
AI could provide the growth spurt that AWS is looking for. In Q3, the division fell slightly short of analysts' net sales expectations, coming in at $23.06 billion, against the $23.13 billion Wall Street expected. AWS growth has been under a microscope this year, and it's a subject that has been "getting the most airtime with investors," JPMorgan's Doug Anmuth wrote before earnings. In a call with media on Thursday, Amazon CFO Brian Olsavsky said that he doesn't believe AWS growth has stalled completely, instead characterizing the cloud business as in a "delicate" transition.
Looking ahead, keep an eye on those operating margins. Amazon's operating margins have been increasing — going up 32% between Q1 and Q2, and clocking a notable beat in Q3 — which suggests that Amazon's post-pandemic efficiency efforts have been working.
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