American multinational technology company, Amazon, saw its shares rise to 10% on Friday a day after the company posted stronger than expected second-quarter revenue.
Amazon sales increased 7% to $121.2 billion in the second quarter which surpassed Wall Street’s estimation of $119.3 billion, and above the high end of the company’s guidance range of $116 billion to $121 million.
This represented Amazon’s third straight quarter of single-digit annual revenue growth. The company’s third-quarter forecast suggested sales growth could re-accelerate, to between 13% and 17%. Amazon revealed its project revenue this quarter of $125 billion to $130 billion, while analysts were expecting a sales forecast of $126.4 billion.
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Advertising which is a growing business for Amazon also experienced strong gains. Revenue in the segment rose to $8.76 billion, 18% higher than the previous year.
Despite the fact that this period was described as a gloomy period for tech companies, which saw a large number of them slow down their hiring process and also laying-off some staff, Amazon beat the expectations of analysts, as the company still thrived despite all odds.
Amazon did pretty well through the second quarter despite tough macro conditions. The company provided investors with very clean 2Q earnings, in the midst of extreme macro-related earnings volatility across the tech sector.
The firm provides the resilience of its business resulting from its optionally and the continuing strength of its cloud business services which brought in $5.7 billion for the company. Its digital advertising business also continued to grow up to 18%.
The rise in Amazon shares earned them a cheer from Wall Street, with one analyst calling the E-commerce giant “a port in the Macro storm”, as it so far appears to be weathering many of the headwinds challenging its tech peers.
Several analysts revealed that the positive results Amazon witnessed in their shares, signifies that the company is making progress on cost headwinds that have pressured the company in recent times. Amazon has been described by analysts as being well positioned for a strong revenue growth narrative in the second half of the year.
Amazon’s CEO Andy Jassy disclosed that despite continued inflationary pressures in fuel, energy, and transportation cost, they are making progress on the more controllable costs the company referenced last quarter, particularly improving the productivity of their fulfillment network.
it is interesting to note that Amazon provided its investors with very clean 2nd quarter earnings, in the midst of extreme macro-related earnings volatility across the tech sector. The firm has maintained a buy rating on its shares but has recently upped its price target to $175 from $155.
This rise in shares will no doubt give the Oracle of Omaha, Warren Buffet a feeling of ecstasy who has great love for the company and continues to invest heavily. One factor that has been disclosed to undoubtedly attract Buffet’s attention to the company is the firm’s impressive and sustained revenue growth.
Over the last decade, Amazon has kept a good track record of revenue growth with its overall revenue increasing from $61 billion in 2012 to more than $470 billion in 2021.