AMZN earnings report was very strong. Takeaways and review posted here, plus a look at positioning. Technical resistance at 200 strong, needs to clear.
Takeaways:
- Absolutely massive beat on EPS 1.43 vs 1.16.
- FOCUSING ON AI:
- Expects FY24 CapEx around $75B—primarily for AWS and generative AI. CEO Jassy calls it a “once-in-a-lifetime opportunity” and anticipates CapEx growth continuing into 2025.
- CFO added CapEx will increase by 30% next quarter and even more, with the majority focused on AI.
- NO DIVIDEND OR BUYBACK ANNOUNCED
- AWS AI business is now a multi-billion-dollar revenue run-rate, growing at a triple-digit YoY rate. It’s scaling more than three times faster at this stage than AWS did in its early days. "We felt like AWS grew pretty quickly."
- "considerable upside" in ad revenue, with AWS as the "partner of choice." Generative AI is used "pervasively" across its business and devices.
- international unit is on track for record profit this fiscal year—its 2nd profitable year since 2014.
- Some analysts also project profits from this segment could top $5B next year, driven by improved warehouse and delivery systems in key markets like Germany and the UK.
- AMZN even says that their chips are doing well as some customers are saying that NVDA chips are a bit expensive. Aggressive push into chips continues.
My take:
- The lack of dividend/buyback announcement was a bit disappointing. However, the earnings were v strong across the board
- AWS was awesome - growing extremely quickly. Ad revenue side of business is doing exceptionally well
- Well positioned in ecommerce, higher volumes pointed to.
- AWS is evolving to accommodate GEnAI and their CAPEX will support them in long run. Medium term and long term story I think is strong
Positioning:
As mentioned, tehcnical resistance at 200 is clearly strong. however positioning doesnt show too mcuh put delta itm there, hence can break. calls v strong on 200 to 210
