Amazon reported a strong first quarter with revenue increasing 13% year-over-year to $143.31 billion, beating expectations. Earnings per share also increased to 98 cents, compared to 31 cents last year. Operating income more than tripled to $15.3 billion, exceeding forecasts and previous guidance. Amazon’s investment in its cloud business and advertising, along with its focus on reducing delivery times and costs, contributed to its success. Competitors include Walmart, Target, Microsoft, and Alphabet.
The strong first-quarter performance indicates further upside for Amazon, with operating expenses lower than expected and both e-commerce and cloud services performing well. Although the outlook for the second quarter was somewhat light, it may prove conservative given the rebound in demand for Amazon Web Services and the company’s continued efforts to reduce costs. As a result, the price target for Amazon is raised to $200 per share, with a 2 rating on the stock. AWS cloud sales were particularly strong in the first quarter, with operating profit margin expanding, although investments are expected to increase to support infrastructure.
North America e-commerce performed well in the first quarter, leading to a significant rise in operating income due to lower costs. International e-commerce also improved, with reduced losses compared to the previous year. Amazon’s advertising business grew 24% in the first quarter, exceeding expectations. Management highlighted ongoing efforts to reduce the cost-to-serve through optimizing network operations. Amazon expects second-quarter net sales to grow 7% to 11% year over year, with operating income guidance closer to expectations. The company aims to expand its operating margin to 8.2%, showing strong growth compared to the previous year.
Overall, Amazon’s diverse business segments, including e-commerce, cloud services, and advertising, contributed to a strong first quarter, with revenue and earnings surpassing estimates. The company’s focus on cost management and optimizing operations has led to improved results across its various business units. While the second-quarter outlook may be conservative, Amazon’s ongoing investments in infrastructure and technology are expected to support future growth. With a price target increase and positive outlook for the company, Amazon remains a strong investment opportunity in the current market environment.
