Amazon Stock Is Crashing - Here's Why The Market Hated Earnings

Daniel Pronk • 2 days ago

Original source

What This Video Is About

The video discusses Amazon's Q3 earnings report, which despite beating the company's own guidance, led to a 7% decline in the stock price in after-hours trading. The report highlighted strong growth in AWS, with revenue increasing 39.3%, and an operating margin of 13.9%, the highest ever.

Major Ideas Discussed

  • Amazon's operating income was $28.1 billion with an operating margin of 13.9%, indicating strong profitability.
  • AWS revenue growth accelerated to 39.3%, with annualized revenue reaching $184 billion, showcasing the segment's potential.
  • Overall sales grew 12% (13% on an FX-neutral basis), impacted by the timing of Prime Day, but still demonstrating resilience.
  • The company's operating cash flow was $42.4 billion for the quarter, up 19% year-over-year, but free cash flow was negative due to significant investments.
  • Amazon projects AWS to grow 40% in 2027 and 2028, potentially reaching $280 billion and $392 billion in revenue, respectively.
  • The company believes it may have two $1 trillion revenue businesses over the next decade, including AWS and its e-commerce platform.
  • Advertising revenue is expected to grow in the high teens by the end of the year.

What to Watch Next

Investors should monitor Amazon's continued investment in AI infrastructure, the growth of its AWS segment, and the overall market reaction to its earnings reports, as these factors will significantly impact the company's future performance and valuation.