Amazon shares dive as Q3 sales forecast misses estimates
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The news: Amazon.com saw its shares slide in after-hours trading on the Nasdaq after the company forecast Q3 sales below estimates.
The numbers: Amazon shares were down 5.05% by 7:30am AEST in extended trading having closed 1.56% lower during the day.
Amazon's cloud business, Amazon Web Services (AWS), reported a 19% increase in revenue to USD26.3 billion ($40.46 billion) for the second quarter, beating market estimates of USD25.95 billion, according to Reuters.
However, the company expects total revenue of USD154.0 billion to USD158.5 billion for the third quarter, compared with analysts' average estimate of USD158.24 billion, according to LSEG data.
Amazon expects operating income of between USD11.5 billion and USD15 billion for the September quarter, below average analysts' forecasts of USD15.7 billion.
The context: AWS, the largest provider of cloud-computing services, is central to Amazon's bid to rival other tech majors in offering generative AI software. Two of its closest competitors, Alphabet and Microsoft, saw shares tumble in the last few days after posting their quarterly earnings.
The strong result from Amazon's cloud computing business was offset by a softer-than-expected performance in the company's e-commerce business, as revenue from Amazon’s seller services and advertising both falling short of estimates.
What they said: "We’re continuing to make progress on a number of dimensions, but perhaps none more so than the continued re-acceleration in AWS growth," CEO Andy Jassy said.
"As companies continue to modernize their infrastructure and move to the cloud, while also leveraging new Generative AI opportunities, AWS continues to be customers’ top choice as we have much broader functionality, superior security and operational performance, a larger partner ecosystem, and AI capabilities..."
The sources: Amazon media release, Reuters
