Amazon Stock Soars 7% After Beating Q3 Earnings Expectations with Cloud and Advertising Growth
Amazon shares jumped 7% on Friday following its impressive third-quarter earnings report, nearing a record high due to growth driven by Amazon Web Services (AWS) and its booming advertising segment. This earnings beat has pushed Amazon’s stock close to its all-time high of $200, which it last touched in July 2024.
Key Amazon Earnings Q3 2024 Highlights
Amazon posted strong financial results for Q3 2024, with revenue climbing 11% to $158.9 billion, above analysts’ forecasts of $157.2 billion. Earnings per share were $1.43, far surpassing the expected $1.14. Key performance drivers included:
Amazon Web Services (AWS) Growth: AWS recorded a 19% revenue increase, totaling $27.4 billion, and showed faster growth than last year’s 12% rate. However, AWS growth was outpaced by Microsoft Azure and Google Cloud, with 33% and 35% increases, respectively.
Advertising Growth: Advertising sales rose by 19% to $14.3 billion, demonstrating a strong performance in Amazon’s digital ad business. This growth in Amazon’s advertising segment aligned closely with Meta’s 18.7% ad growth and surpassed Google’s 15% ad revenue increase.
Increased Capital Expenditures: Amazon increased its capital expenditure by 81% year-over-year to $22.62 billion, investing in data centers and AI infrastructure, including Nvidia processors. Amazon is set to leverage AI across both its cloud and e-commerce businesses, with CEO Andy Jassy forecasting capital expenditure to reach $75 billion in 2024, primarily driven by AI innovation.
Insights from Analysts and Amazon Leadership
Analysts at Roth MKM commended Amazon’s diversified revenue streams, spanning e-commerce, advertising, subscriptions, online video, and cloud. They also highlighted Amazon’s significant investments in AI technology, which make it a formidable competitor among tech giants and reiterated a “buy” rating on Amazon stock.
According to CFO Brian Olsavsky, most of Amazon's 2024 capital expenditures are focused on expanding its technological infrastructure to support cloud and AI capabilities. CEO Andy Jassy remarked that AI represents a “once-in-a-lifetime opportunity,” reinforcing Amazon's strategic focus on long-term AI advancements.
Amazon's Revenue Forecast for Q4 2024
Amazon projects Q4 revenue to range between $181.5 billion and $188.5 billion, signaling growth between 7% and 11% year-over-year. This projection, though robust, falls slightly short of the average analyst estimate of $186.2 billion.