Amazon stock surges as second-quarter income soars

Amazon's shares surged nearly 8% after the company reported a net profit of $6.7 billion in Q2, compared to a loss of $2 billion last year. The company's revenue increased 11% to $134.4 billion.

Amazon's shares experienced a significant surge of almost 8 percent in after-hours trading on Thursday following the company's announcement that it had turned a net profit of $6.7 billion in the second quarter. This is in stark contrast to the $2 billion loss the company experienced during the same period last year. The second quarter profit represents a 109 percent increase compared to the first quarter, during which Amazon earned a net profit of $3.2 billion. The company attributed part of its net profit to a pre-tax valuation gain of $2 million from its investment in electric vehicle maker Rivian Automotive.

In addition to its impressive profit margins, Amazon also reported an 11 percent increase in revenue during the second quarter, reaching $134.4 billion. This exceeded analysts' expectations, who had estimated revenue to be around $131.5 billion. The company's revenue has consistently exceeded $100 billion for the past 11 quarters. Furthermore, Amazon's operating income rose to $7.7 billion in the second quarter, up from $3.3 billion in the same period last year.

Amazon's stock has also seen positive growth, rising by approximately 50 percent since the beginning of the year. At the close of trading on Thursday, the stock was 0.55 percent higher at $128.91. However, in after-hours trading, it surged to $139.13 per share. This is a significant recovery for Amazon, as its share price had dropped by over 50 percent in 2022, marking the largest decline since 2000.

Andy Jassy, Amazon's CEO, expressed satisfaction with the company's performance, stating that it was another strong quarter of progress. He highlighted the company's efforts to lower its cost to serve in its fulfillment network and provide Prime customers with faster delivery speeds than ever before.

While North American market sales contributed more than 60 percent to Amazon's overall sales, increasing by nearly 11 percent to $82.5 billion in the second quarter, international market sales also experienced significant growth. International sales surged by 10 percent annually to $29.7 billion, contributing over 22 percent to the company's overall sales.

Amazon Web Services (AWS), the company's subsidiary that offers on-demand cloud computing platforms to other businesses, also reported positive sales momentum. AWS revenue reached $22.1 billion in the second quarter, surpassing analysts' expectations of $21.8 billion. This represents an annual increase of over 12 percent. Jassy attributed AWS's success to its ability to add to its leadership position in the cloud market and its release of generative AI technologies that make it easier and more cost-effective for companies to train and run models.

In terms of advertising revenue, Amazon earned $10.7 billion in the previous quarter, surpassing expectations of $10.4 billion. Looking ahead, the company expects its third-quarter revenue to range between $138 billion and $143 billion, representing a 9 to 13 percent increase compared to the same period last year. Operating income is projected to be between $5.5 billion and $8.5 billion, compared to $2.5 billion in the third quarter of 2021.

Overall, Amazon's impressive financial performance, coupled with its successful Prime Day event, has positioned the company for continued growth and financial efficiency. Despite the challenges faced by the S&P 500 earnings, Amazon remains committed to its growth trajectory.