Amazon stock surges strong earnings fuelled AI-driven cloud growth

Amazon's quarterly report beats projections, boosted by AI interest. Revenue and net income soar, but revenue outlook disappoints. Advertising revenue spikes.

Amazon.com exceeded expectations in its latest quarterly report, driven by the growing interest in artificial intelligence that boosted its cloud-computing division. This outstanding performance led to a significant increase in the company's shares by up to 5% in after-hours trading.

The company's net sales saw a remarkable 13% year-over-year surge, reaching $143.3 billion, surpassing analyst predictions. Net income also more than tripled to $10.4 billion in the first quarter, with adjusted earnings per share surpassing consensus estimates.

Analysts like Gil Luria from D.A. Davidson & Co. reiterated their BUY rating and set a $235 price target for Amazon following the strong results in both the top and bottom-line. The Retail and AWS segments of the business performed exceptionally well, with AWS showing notable reacceleration in both generative AI and non-generative AI workloads.

Despite these positive numbers, Amazon's revenue outlook for the upcoming quarter fell short of analyst expectations, forecasting revenue between $144.0 billion to $149.0 billion. The company's projection was below the average forecast of $150.07 billion.

Advertising emerged as a significant revenue driver for Amazon, marking a 24% increase from the previous year. This growth in advertising revenue reflects trends seen in other tech giants like Meta, Snap, and Alphabet.

Although Amazon has shown financial strength, it stands out from its peers by not implementing a quarterly dividend, despite its growing cash reserves. The company's stock surged by 20% since its inclusion in the Dow Jones Industrial Average earlier this year, indicating investor confidence in its growth trajectory.

During the earnings season, various companies reported mixed results. Starbucks faced challenges in its latest quarter, especially in China, leading to a 10% drop in its shares during after-hours trading. Chip designer AMD issued a cautious forecast for the ongoing quarter, slightly surpassing expectations in the previous quarter.

Super Micro Computer revised its sales forecast upward for the full year, anticipating sales between $14.7 billion and $15.1 billion. The company's stock, which has seen significant growth, experienced a sharp downturn in post-market trading.