Amazon.com, Inc. (NASDAQ: AMZN) reported its best sales growth in more than six years and soared past $1 billion in profit again. AMZN stock closed yesterday up almost 4% in anticipation of first quarter 2018 results.
Amazon more than doubled its quarterly net profit to $1.6 billion as revenue jumped by almost 43%. The revenue growth was AMZN’s best since Q3 2011. Amazon.com said the better-than-expected results were fueled by its Amazon Web Services cloud-services unit and a surge in the company’s advertising business.
“AWS had the unusual advantage of a seven-year head start before facing like-minded competition, and the team has never slowed down,” said Jeff Bezos, Amazon’s founder and CEO. “As a result, the AWS services are by far the most evolved and most functionality-rich. AWS lets developers do more and be nimbler, and it continues to get even better every day. That’s why you’re seeing this remarkable acceleration in AWS growth, now for two quarters in a row. A huge thank you to all our AWS customers, and you can be sure we’ll keep working hard for you.”
AMZN management updated its Q2 guidance, nothing that net sales are expected to be between $51.0 billion and $54.0 billion, or to grow between 34% and 42% compared with Q2 2017. This guidance anticipates a favorable impact of approximately $1.2 billion or 320 basis points from foreign exchange rates. Operating income is expected to be between $1.1 billion and $1.9 billion, compared with $628 million in Q2 2017.
Source: Statista
AWS saw huge growth. Sales rose 49% to $5.44 billion, while operating income grew 57% to $1.4 billion. AWS has faced stronger competition from rivals including Microsoft Corporation (NASDAQ: MSFT) and Alphabet Inc (NASDAQ: GOOGL) in recent months. Microsoft on Thursday noted that its cloud-business revenue rose 93%.
Ahead of yesterday’s earnings announcement, InvestorPlace’s Josh Enomoto wrote: “I completely get why some traders adopted a cautious approach heading into the AMZN earnings. While I half-joke that Amazon stock is an automatic investment, you must be vigilant with anything that involves money. That said, I believe some bears are looking too deeply at the details, attempting to find weaknesses that don’t exist.”
