Amazon Q3 Earnings Earn Approval of Analysts

Amazon logo | Image by Sergei Elagin

The results of Amazon’s exhaustive cost-cutting measures over the last year were on display during the company’s third-quarter earnings on Thursday.

“We had a strong third quarter as our cost to serve and speed of delivery in our Stores business took another step forward, our AWS [Amazon Web Services] growth continued to stabilize, our Advertising revenue grew robustly, and overall operating income and free cash flow rose significantly,” Amazon CEO Andy Jassy said in a news release.

Shares of Amazon.com jumped nearly 7% on Friday after the e-commerce giant reported stellar 2023 Q3 earnings that ended September 20, beating analyst estimates and included across-the-board financial increases.

In the third quarter of 2023, Amazon’s net sales increased by 13%, while operating cash flow rose by 81%. There was a significant rise in net income from $2.9 billion in Q3 2022 to $9.9 billion in Q3 2023. Moreover, operating income increased from $2.5 billion in Q3 2022 to $11.2 billion in Q3 2023.

Other highlights from Amazon’s Q3 earnings include cloud services growth and strong operating margins of 7.8%, the highest margin since the first quarter of 2021, and a significant increase over the 2% margin reported during the same quarter last year.

In response to strong earnings, financial services company Jefferies upgraded Amazon shares (NASDAQ: AMZN) to a “Buy” rating.

“We remain positive on AMZN supported by continued improvements in the margin profile, with visibility into an AWS acceleration and clear LT AI tailwinds that will impact the model over time,” Jefferies analysts said in a note to investors, NBC 5 DFW reported.

“We believe shares offer defensive positioning in a worsening market at compelling value considering the longer-term growth and earnings power of the model, with still embedded optionality in the form of grocery, healthcare, and satellite technology,” William Blair analysts wrote Friday.

Analysts at Goldman Sachs chimed in, viewing the company’s third-quarter report as a “beat across the board” and suggested that the risk versus reward remains “skewed heavily in a positive direction.”

“Looking over a multi-year timeframe, we reiterate our view that Amazon will compound a mix of solid revenue trajectory with expanding margins as they deliver yield/returns on multiple-year investment cycles,” Goldman Sachs analysts said in a note Friday, per NBC 5.

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