Andrew Ross Sorkin speaks with Amazon CEO Andy Jassy through the Recent York Times DealBook Summit within the Appel Room on the Jazz At Lincoln Center on November 30, 2022 in Recent York City.
Michael M. Santiago | Getty Images
Shares of Amazon fell 8% on Friday, a day after the e-retailer posted soft growth in its retail and cloud computing businesses and gave downbeat guidance.
Its stock was hit harder than peers Apple and Alphabet, which also reported on Thursday evening. Shares of Apple increased 2% on Friday, while Alphabet declined 2%. Each of those corporations missed on the highest and bottom lines.
Amazon’s fourth-quarter revenue increased 9% to $149.2 billion, topping analysts’ expected $145.4 billion. However the revenue beat was overshadowed by one other quarter of slowing growth in Amazon’s core retail business and in Amazon Web Services, which have been dented by the difficult economic environment.
Amazon said it expects revenue of between $121 billion and $126 billion in the present quarter. Analysts had been expecting $125 billion.
“Consumers sound cautious and the Cloud deceleration cadence appears to be landing within the ‘mid-teens’ for [the first quarter],” analysts at Piper Sandler, which have an chubby rating on Amazon shares, wrote in a note Friday.
“Above all, management comments suggest AMZN remains to be navigating a difficult stretch,” the analysts added.
Despite the near-term rockiness, several analysts said they continue to be encouraged by CEO Andy Jassy’s efforts to regulate costs. In addition they consider Amazon will prove it could actually withstand the economic turbulence and might proceed to grow in the long run.
Jassy has been working to get Amazon’s costs under control after a period of unbridled expansion. Last month, the corporate said it could lay off greater than 18,000 corporate employees. It enacted a hiring freeze amongst its corporate ranks, cut some projects, closed some physical stores and paused warehouse expansion.
“While the subsequent few quarters will likely remain volatile as an output of macroeconomic volatility, the long-term narratives from Amazon and a compelling multi-year risk/reward should appeal to investors,” Goldman Sachs’ Eric Sheridan wrote in a note Friday.
Analyst sentiment was a bit different for Apple, which telegraphed that things are recuperating. Which will explain why its stock is within the green. “Taking a step back, it’s rare to see Apple miss and guide down in 1 / 4, but we consider the long-term positives from tonight’s report outweigh the short-term negatives,” Morgan Stanley’s Erik Woodring wrote.
Similarly, despite Alphabet’s misses, analysts are bullish on its prospects for artificial intelligence and highlighted its strong core business. “We see Alphabet as a more defensive stock within the group in 2023 with more relative earnings stability given utility of search, expense flexibility, healthy margins that may minimize money flow concerns, and opportunity to support the stock with buybacks,” Bank of America’s Justin Post said.
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