Amazon ( AMZN ) stock fell more than 8% Friday after the retailer and cloud provider issued guidance for the current quarter on Thursday that fell below both primary and lower expectations.
The disappointing earnings were fueled by a weak July jobs report, which sent the tech world and the broader stock market into the red.
For the third quarter, Amazon managed sales of 154 billion dollars to $ 158.5 billion compared to the analyst forecast for $ 158.43 billion, according to Bloomberg data. Its operating income in the third quarter is expected to fall in the range of $11.5 billion-$15 billion. Wall Street expected operating income to reach $15.2 billion.
The report capped a wave of Big Tech results that gave warnings that investors have limited patience for more AI use. Any weakness in the core business has increased Wall Street scrutiny.
Although Amazon reported earnings per share (EPS) of $1.26, beating estimates of $1.04 and nearly doubling profits from the same period last year, investors focused on weakness of the report.
Amazon generated revenue of 148 billion dollars, which is less than the 148.8 billion dollars that analysts expected, but even a small error did not impress.
The company’s growing advertising segment, which has been growing consistently at a double-digit rate, continues to show strength, but that segment also came in below expectations, registering $ 12.8 billion in revenue versus $13 billion expected.
A bright spot in the report comes from its cloud business, Amazon Web Services. AWS earned $26.3 billion compared to the $26 billion expected and above the $22.1 billion in the same period last year.
Amazon CFO Brian Olsavsky told reporters on the phone after the award that AWS is on track to generate more than $105 billion a year.
Like several of its peers, Amazon is investing heavily in infrastructure to support the rapid deployment of new AI technologies and cloud services.
Olsavsky said the company spent more than $30 billion in the first half of the year on capital expenditures, due to growing demand for AWS services, including demand for AI productivity tools. Amazon expects that investment to increase for the second half of the year, he said.
On the ecommerce front, each store has attracted increasing competition from the likes of Temu and Shein, companies that specialize in low-cost goods that rely on factory-direct sourcing. . Amazon is reportedly developing its digital discount store to compete with fashion and lifestyle spending.
“We’re seeing cautious buyers,” Olsavsky said. They want deals.
“Amazon’s primary growth was short on lower consumer spending in the quarter between two major sales events — the Big Year Sale in March and Prime Day in July,” said the analyst. eMarketer CEO Sky Canaves said in a statement.
“Amazon will have to position its offerings and promotions to take advantage of these trends, such as the reported plans to launch a discount section like Temu in time for the holidays this year,” Canaves said.
Amazon’s report came days after its cloud rival and AI competitor Microsoft ( MSFT ) beat both top and bottom line expectations but missed on cloud revenue, posting lower shares. Before that disappointment, Google parent Alphabet (GOOG, GOOGL) posted a lower-than-expected amount of YouTube ads, which again sent investors to work.
Meta (META), on the other hand, was hailed by Wall Street, delivering better than expected results for revenue and profit, as management warned that they expected “significant” costs. of funds in 2025. Shares gained more than 4% Thursday. .
Apple (AAPL) reported earnings alongside Amazon after the closing bell, beating analysts’ expectations above and below despite a year-over-year decline in iPhone sales.
Hamza Shaban is a Yahoo Finance reporter covering markets and economics. Follow Hamza on X @hshaban.
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