"Amazon Sees Improvement in Retail and Cloud Divisions... Stock Price Rebound Begins"

Over 27% Increase in One Month
Reflecting Expectations for Improved Performance in the Second Half

[Asia Economy Reporter Minji Lee] There are forecasts that Amazon's earnings and stock price will continue to rise. This is based on the analysis that despite sluggish e-commerce market conditions, Amazon is recording solid sales and cloud demand is increasing.

On the 30th, Amazon's stock price was $134.95, rising more than 27% over the past month. The recent sharp upward trend in the stock price is attributed to strong earnings announcements and expectations that the U.S. Federal Reserve (Fed) will slow the pace of interest rate hikes.

Amazon's Q2 revenue was $121.2 billion, a 7% increase compared to the same period last year, and operating profit was $3.3 billion. Although the guidance significantly reflected productivity deterioration due to demand slowdown against logistics volume and workforce expansion, both revenue and operating profit exceeded market expectations by improving cost efficiency. However, a non-operating loss of $3.9 billion from the valuation loss of Rivian shares was recorded, resulting in a net loss of $2 billion.

By segment, offline store revenue increased by 12.5% year-over-year, and retail third-party services (9.1%), retail subscription services (10.1%), and advertising services (17.5%) continued their growth. On the other hand, online store revenue decreased by 4.3% compared to the same period last year.

Myungjoo Kim, a researcher at Korea Investment & Securities, said, “Among the retail segments, third-party service sales are performing well because Amazon's commerce platform competitiveness is continuously improving,” adding, “The launch of the new fulfillment service (Buy with Prime) in April and the continuous expansion of benefits for Prime members are positive factors.”

In particular, AWS revenue reached $19.7 billion, a 33.3% increase year-over-year, maintaining a high growth rate of over 30%. Operating profit rose 36% to $5.7 billion, with an operating margin of 29%. Jaeim Kim, a researcher at Hana Securities, said, “Despite concentrated stock compensation expenses affecting profits in Q2, it is encouraging that the operating margin remains solid,” and explained, “Amazon plans to increase AWS infrastructure investment in the second half of the year to respond to the expanding cloud customer base and growing demand.” AWS infrastructure is expected to account for more than half of this year’s capital expenditures.

The company provided Q3 guidance with revenue projected at $125 billion to $130 billion, a 13-17% increase year-over-year. Operating profit guidance was $0 to $3.5 billion, which did not meet market expectations. Jaegoo Kang, a researcher at Hanwha Investment & Securities, said, “Although about $1.5 billion in cost improvements are expected from fulfillment network operations, the guidance seems to reflect costs incurred from investments in AWS and expansion of digital content.” Inflationary pressures are expected to continue into Q3, and the impact of a strong dollar is forecasted at around 390 basis points. The July Prime Day results will be reflected in Q3, with an estimated record performance selling over 300 million products.

Researcher Jaeim Kim said, “Despite the slowdown in the e-commerce market growth, Amazon will maintain solid sales,” and added, “Considering the increase in cloud demand and expansion of the customer base, there is anticipation for a momentum of earnings rebound for Amazon.”

This content was produced with the assistance of AI translation services.