More growth is ahead for Amazon stocks, experts predict.
Amazon crushed Wall Street expectations last quarter, surpassing Walmart’s revenue for the first time. However, investors were disappointed by the inactive advance guidance in the revenue report.
Online Retail King reports revenue of $187.8 billion, slightly higher than its consensus forecast of $187.3 billion.
Additionally, earnings exceeded expectations, reaching $1.86 per diluted share compared to market estimates of $1.49 per share.
Growth Amazon’s cloud business (Amazon Web Services (AWS)) accounted for 19%, roughly in line with last quarter growth. Cloud revenue was $287.9 billion, slightly below market forecast.
Amazon highlighted advances in artificial intelligence (AI) chip technologies, new foundational models (DeepSeek and Luma AI), and next-generation data analytics and AI services in the Amazon AI ecosystem.
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The weaknesses of the cloud unit reflect comparable trends between Google and Microsoft. This is because Wall Street has recalculated heavily AI investments over the past three years, and investors are developing a fierce desire for returns.
The busy holiday shopping season helped lift Amazon’s retail business. Revenue rose 7% in the quarter to $755.6 billion, higher than forecast of $74.555 billion.
The company reported 65% more items were delivered to Amazon Prime members in the US on the same day or overnight compared to the fourth quarter of 2023.
Amazon also highlighted various successes in the retail space, including the launch of a new US shopping application and mobile site named Amazon Haul, as well as record-breaking Black Friday Week and Cyber Monday Deal events.
Looking forward to this quarter, Amazon’s forecast sales will range from $151 billion to $155.5 billion, with analysts expecting less than $158.5 billion.
It also highlighted the “adverse effect” of $2.1 billion from the foreign exchange rate this quarter.
“This guidance predicts an unusually large and unfavorable effect of approximately $2.1 billion or 150 basis points from the foreign exchange rate,” the report states.
The US dollar has been heavily strengthened since President Donald Trump’s election victory in November.
The US Dollar Index (DXY), a greenback gauge against six currencies weighted baskets, including the British pound and Japanese yen, has risen 3% in the past three months, reaching its highest level in more than two years.
It was whipped over the last month amid fears of a trade war, and this year it has fallen by 0.7%.
Better than Walmart
Eric Clark, portfolio manager at Rational Funds, said Mega-Cap stocks, a multiparty company with a market value of over $200 billion, could be “the most upward” over the next three to five years. Masu.
“The race between Amazon and Walmart is a race to see who is making $1 trillion in revenue in a year,” Clark told the Epoch Times in a memo sent by email. “For Amazon, it’s only 9.7% annual revenue growth over five years to reach this milestone.”
For over a decade, Walmart has been the leading revenue generator quarterly, surpassing Titan Exxonmobil in 2012.
In its latest quarterly revenue report, Amazon has pushed Walmart out of the throne for the first time.
Amazon Web Services has played a major role in the company’s rise. Since the pandemic, AWS revenue has doubled and now accounts for almost a fifth of its total revenue.
Walmart’s next revenue report is scheduled for February 20th.
Apple and United Health are members of the elusive $100 billion Revenue Club. Pharmaceutical Juggernauts CVS Health and McKesson are closer to joining the group, reporting $95 billion and $94 billion in the last quarter, respectively.
Meanwhile, Clark points out that more growth could be ahead. He believes Amazon’s stock is cheaper than its retail, cloud and artificial intelligence growth outlook.
