Proactive Investors - Amazon.com Inc (NASDAQ:AMZN)'s first-quarter results surpassed expectations at investment bank Jefferies.
The e-commerce giant’s net sales and operating income came in 0.5% and 37% above consensus respectively, “largely driven by outperformance at AWS", noted Jefferies analysts, referring to cloud-computing service Amazon Web Services.
“We were encouraged by AWS net sales growth of 17%, which came in ahead of buy-side expectations of 15%-16% growth and represented the second straight quarter of acceleration,” said Jefferies.
“Impressively, AWS operating income came in 30% ahead of expectations as AWS printed a 37.6% operating margin (all-time high), meaningfully above the previous record of 35.3% achieved in 1Q22 and expanding 800bps sequentially.”
However, analysts said Amazon's guidance for the second quarter was less optimistic, with projections falling below consensus estimates, though Amazon is “typically conservative on guidance”, analysts added.
Jefferies anticipates a substantial increase in Amazon’s capital expenditures to approximately $66 billion for full-year 2024, up from around $48 billion in 2023 to support AWS and artificial intelligence initiatives.
“Impressively, Amazon achieved a ‘multi-billion dollar AI run-rate’ in Q1, suggesting that they are not as far behind in AI as many perceive they are,” said analysts.
Jefferies has a $225-per-share price target. The stock opened 2.6% higher at $180.1 on Wednesday.