Shares of Amazon (NASDAQ: AMZN) were soaring today after the tech giant delivered a strong fourth-quarter earnings report after hours, beating estimates on the top and bottom lines, as profit margins ramped up in the quarter and results were solid across the board.
As of 10:18 a.m. ET, the stock was up 6.8% on the news.
Image source: Getty Images.
Amazon delivers the profits
Revenue in the quarter, which included the holiday season, jumped 14% to $170 billion, ahead of estimates at $166.2 billion, driven by solid growth in all three of its business segments.
North American sales rose 13% to $105.5 billion, international segment sales increased 17% to $40.2 billion, and Amazon Web Services (AWS) sales were up 13% to $24.2 billion, a slight sequential improvement.
Profits also rose significantly in all three segments as its higher-margin businesses outgrew overall revenue. In North America, it flipped a $200 million loss in the quarter a year ago into $6.5 billion, driven by 27% growth in advertising to $14.7 billion and 20% growth in third-party seller services to $43.6 billion.
In the international segment, its operating loss narrowed from $2.2 billion to $0.4 billion, and AWS operating income improved from $5.2 billion to $7.2 billion.
Overall, operating income rose from $2.7 billion to $13.2 billion, and it reported $1.00 in earnings per share, up from $0.03 in EPS a year ago and better than estimates at $0.80.
CEO Andy Jassy noted the delivery speed and costs had improved, saying, "The regionalization of our U.S. fulfillment network led to our fastest-ever delivery speeds for Prime members while also lowering our cost to serve."
Is Amazon a buy?
Looking ahead, Amazon expects net sales of $138 billion-$143.5 billion, up 8%-13%, which compares to the consensus at $142.1 billion, and it projected operating income of $8 billion-$12 billion, compared to $4.8 billion in the first quarter of 2023.
Amazon is proving that it's able to deliver solid top-line growth despite its massive size, and its operating margins should continue to expand as its growth is driven by higher-margin businesses like its third-party marketplace, advertising, and AWS.
If that pattern continues, the stock should continue to move higher.
Should you invest $1,000 in Amazon right now?
Before you buy stock in Amazon, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Amazon wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of January 29, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
