- Raymond James Analyst Aaron Kessler continued to outperform Amazon.com Inc. AMZN Ahead of the fourth quarter results.
- Analysts see strong long-term e-commerce growth for Amazon, continued leadership in cloud and AWS, NT risks to street earnings forecasts, growth in high-margin advertising, and improved margins in core retail I hope.
- Kessler expects retail growth to slow in the fourth quarter given tough comps, macroeconomic slowdowns (particularly in Europe) and FX headwinds.
- Given the high profit margins inherent in the advertising business, a slowdown in retail top-line growth would represent a significant loss.
- On the third-quarter conference call, management noted that AWS growth is slowing as customers try to tighten costs and certain industries are setbacks.
- moreover, Microsoft’s MSFTMore Azure Cloud growth slowed in the December quarter. MSFT also led Azure to a slowdown in the March quarter.
- Analyst checks show Amazon’s advertising momentum continuing in the fourth quarter.
- Kessler believes the workforce reduction could save Amazon’s annual operating costs, in addition to $4 billion.
- Analysts had called for more color and expected continued fulfillment and an easing of transport buildouts, centered on the 2022 CapEx plan.
- Kessler believes AWS growth rates and potential margin improvements in retail in 2023 will be a key focus for investors this quarter.
- Analysts estimate total revenue of $147 billion, above consensus of $145.6 billion and guidance of $14-148 billion.
- Price action: AMZN shares fell 1.86% to trade at $94.56 on Wednesday’s final check.
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