E-commerce and cloud computing giant Amazon (AMZN) traded lower in the after-market trading, even after reporting better-than-expected results for the first quarter. The share price drop came as free cash flow fell sharply to $1.2 billion from $25.9 billion a year earlier.
Claim 55% Off TipRanks
Forget margin or options. Here's how the pros trade AMZNAmazon said the decline was driven by a $59.3 billion surge in property and equipment spending, largely tied to its aggressive AI infrastructure build-out.
Sales increased by 17% year-over-year to $181.50 billion, with growth across North America and International segments. Also, momentum in its cloud platform, AWS, reaccelerated during the quarter. The topline also beat analysts’ expectations of $177.28 billion.
Further, earnings per share came in at $2.78, which easily surpassed analysts’ consensus estimate of $1.63 per share. The bottom line includes $16.8 billion in pre‑tax gains tied to Amazon’s investment in Anthropic.
AWS Reclaims Momentum
AWS was the standout of the quarter as revenue climbed 28% year‑over‑year to $37.6 billion, marking its fastest growth rate in 15 quarters. Operating income for the cloud division also rose to $14.2 billion, up from $11.5 billion last year.
CEO Andy Jassy highlighted rising demand for Amazon’s custom silicon, Graviton, Trainium, and Nitro, which collectively surpassed a $20 billion annual revenue run rate and are growing at triple-digit rates.
Importantly, AWS’ revenue has been growing continuously for the past few quarters, as illustrated below, with the trend continuing in the current quarter.
Q2 Outlook
For the second quarter, Amazon expects revenue between $194 billion and $199 billion, reflecting16% to 19% growth. Also, operating income is projected between $20 billion and $24 billion. Guidance assumes Prime Day will occur in Q2.
What Is the Price Target for AMZN Stock?
Currently, Wall Street has a Strong Buy consensus rating on Amazon stock based on 40 Buys and two Holds. The average AMZN stock price target of $289.05 indicates 10.09% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
