Amazon says consumers cautious, forecasts revenue below Wall Street targets
Corrects to paragraph 11 to say Amazon Web Services is Amazon's cloud business, not Microsoft's
By Greg Bensinger and Deborah Mary Sophia
Aug 1 (Reuters) -Amazon.com AMZN.O reported slowing online sales growth in the second quarter and said cautious consumers were seeking out cheaper options for purchases, sending shares down nearly 8%.
The after-hours stock drop came despite second-quarter profit and cloud computing sales that beat analyst estimates. Amazon shares had gained over 20% this year through the session close on Thursday, and investors were disappointed that the company forecast current-quarter sales below Wall Street estimates.
Amazon's CFO, Brian Olsavsky, told reporters on a call that consumers "are continuing to be cautious with their spending trading down."
He added, "They are looking for deals," and noted that lower priced products were selling briskly.
CEO Andy Jassy agreed, adding on a call with analysts that customers were trading down on price when they could. Amazon's online retail business has faced heightened competition from budget retailers like Temu and Shein, which sell a wide variety of goods at bargain-basementprices direct from China.
The comments echoed similar ones from Oreo-maker Mondelez MDLZ.O, PepsiCo PEP.O and Kraft KHC.O, which in recent days highlighted challenges facing American consumers.
Amazon’s online stores sales rose 5% in the second quarter to $55.4 billion, compared with growth of 7% in the first quarter.
One analyst said slowing retail sales growth was driving the post-market shares sell-off.
"They're showing continued momentum on cloud in terms of re-acceleration and so that's certainly where I think investors will be more positive, but the retail aspect is definitely what's weighing on the stock right now," said Charles Rogers, analyst at M Science.
"We're continuing to make progress on a number of dimensions, but perhaps none more so than the continued re-acceleration in AWS growth," Jassy said in a release announcing the results.
Amazon Web Services (AWS) is Amazon's cloud business.
Olsavsky told reporters it was difficult to make predictions for the third quarter because events like the presidential election and the Olympicsin Paris were distracting consumers. He said Amazon’s two-day discount sales event known as Prime Day in July was its "biggest ever," without providing specifics.
On Wednesday, Kraft said it has had to offer more entry-level price points, expand its range of Oscar Mayer products at dollar stores and introduce Capri Sun multi-serve bottles because more shoppers were seeking value.
PLAYING CATCHUP ON AI
Like other big tech companies, Amazon is boosting capital expenditures to invest in infrastructure for and development of artificial intelligence. Olsavsky said spending in this year’s first six months was about $30.5 billion, suggesting about $16.5 billion in the second quarter.
Seattle-based Amazon is playing catchup with rivals Microsoft, which partners with OpenAI, and Google in developing its own so-called large language models that can respond nearly instantly to complicated queries or prompts.
It has rolled out a chatbot, dubbed Rufus, designed to help customers make purchasing decisions for specific purposes.
Both Google-parent Alphabet GOOGL.O and Microsoft MSFT.O cautioned investors last month that expenses would remain elevated throughout the year to support developing pricey AI software and services. Investors took that as a signal that a payoff from the buzzy technology could take longer than originally hoped.
Amazon Web Services reported a 19% increase in revenue to $26.3 billion for the second quarter, surpassing market estimates of $25.95 billion.
The company expects revenue of $154.0 billion to $158.5 billion for the third quarter, compared with analysts' average estimate of $158.24 billion, according to LSEG data.
Amazon also missed estimates for advertising sales, a closely watched metric, as it ramps up competition with rivals Meta Platforms META.O and Google. Sales of $12.8 billion in the quarter compare with the average estimate of $13 billion, according to LSEG data. The company earlier this year began placing ads in its Prime Video offering for the first time.
Still, Olsavsky said he was pleased with the advertising results. Those sales grew 20% in the quarter.
Cloud providers' capital spend surges on AI investments https://reut.rs/4ceknl4
North America, International segments slow, eclipsing AWS https://reut.rs/4d6gwIc
Reporting by Deborah Sophia in Bengaluru; Editing by Devika Syamnath and David Gregorio
Gerelateerde activa
Laatste nieuws
Disclaimer: De entiteiten van de XM Group bieden diensten en toegang tot ons online handelsplatform op basis van uitsluitend-uitvoering, waardoor een persoon de beschikbare content op of via de website kan bekijken en/of gebruiken, zonder dat dit is bedoeld voor wijziging of uitbreiding. Dergelijk(e) toegang en gebruik vallen onder: (i) de algemene voorwaarden; (ii) risicowaarschuwingen; en de (iii) volledige disclaimer. Dergelijke content wordt daarom alleen aangeboden als algemene informatie. Wees u er daarnaast vooral van bewust dat de inhoud op ons online handelsplatform geen verzoek of aanbieding omvat om transacties op de financiële markten uit te voeren. Het beleggen op welke financiële markt dan ook vormt een aanzienlijk risico voor uw vermogen.
Alle materialen die op ons online handelsplatform worden gepubliceerd zijn bedoeld voor educatieve/informatieve doeleinden en omvatten geen – en moeten niet worden beschouwd als het bevatten van – financieel, vermogensbelastings- of handelsadvies en aanbevelingen, of een overzicht van onze handelsprijzen, of een aanbod of aanvraag van een transactie in financiële instrumenten of ongevraagde financiële promoties voor u.
Alle content van derden, alsmede content die is voorbereid door XM, zoals opinies, nieuws, onderzoeken, analyses, prijzen en andere informatie of koppelingen naar externe websites op deze website worden aangeboden op een 'zoals-ze-zijn'-basis, als algemene marktcommentaren, en vormen geen beleggingsadvies. Voor zover dat content wordt beschouwd als beleggingsonderzoek, moet u zich ervan bewust zijn en accepteren dat de content niet bedoeld was en niet is voorbereid in overeenstemming met de wettelijke vereisten die zijn opgesteld om de onafhankelijkheid van beleggingsonderzoek te bevorderen en als zodanig onder de geldende wetgeving en richtlijnen moet worden beschouwd als marketingcommunicatie. Zorg ervoor dat u onze Mededeling over niet-onafhankelijk beleggingsonderzoek en risicowaarschuwing in verband met de voorgaande informatie doorneemt en begrijpt; die kunt u hier lezen.
