Amazon.com's stock rose more than 2% on Wednesday after the company reported earnings that far exceeded analysts' expectations.
The company earned $0.98 per share on revenue of $143.3 billion. This exceeded analysts' estimates of $8.3 billion and $142.6 billion, respectively. Amazon's stock price recently rose 1.6%.
Amazon has a large weight in many exchange-traded funds.For example, $19 billion Consumer Discretionary Sector SPDR Fund (XLY) and $94 million ProShares Online Retail ETF (ONLN) Each holds about a quarter of their portfolio in stocks.
But it was Amazon's cloud business that drove up the stock on Wednesday, even though its huge retail platform classifies it as a consumer discretionary company under the Global Industry Classification Standards.
Amazon Web Services (AWS) revenue increased 17% year over year in the first quarter, accelerating from 13% in the fourth quarter.
AWS generated $25 billion in revenue in the first three months and is on track to generate more than $100 billion in revenue this year.
“The combination of companies innovating their infrastructure modernization efforts and the appeal of AWS's AI capabilities is once again accelerating AWS's growth rate,” said Amazon President and CEO Andy Jassy.
Are sales weak in the second quarter?
AWS's strength helped offset Amazon's weak sales outlook for the entire second quarter.
Amazon expected second-quarter net sales of $144 billion to $149 billion, lower than analysts' expectations of $150.2 billion.
Still, analysts were generally optimistic after Amazon's latest earnings report.
Morgan Stanley analysts said, “The acceleration of AWS should further increase our confidence in future growth as we focus on new initiatives and complete most of the optimization,” and set a price target for the company's stock. increased to $220.
Meanwhile, Baird analysts, who have a $210 price target on the stock, said “improved fulfillment efficiency should provide continued tailwinds to retail margins.”
Amazon's stock has risen 18% since the beginning of the year, outpacing Amazon's 6% rise. SPDR S&P 500 ETF Trust (SPY).
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