(US) Amazon and AMD Financial Highlights
(US) Amazon and AMD Financial Highlights

(US) Amazon and AMD Financial Highlights

Thu, May 2, 2024 12:39 PM

By Vincent Lau, Head of Equity Research, Rakuten Trade. 

 

Amazon.com (AMZN) announced quarterly earnings that beat market estimates, driven by cloud computing growth. However, its revenue forecast for Q2 fell short. 

 

Here’s a breakdown for you on what’s happening with Amazon.com: 

 

The Good News: 

  • First-quarter revenue rise of 12.53% from a year ago to USD143.31 billion 
  • Net profit attributable was USD12.01 billion, an increase of 236.73% compared to USD3.57 billion. 
  • The GAAP earnings per share (EPS) were USD1.17 per share, up 226.61%, beating analysts' estimate of USD0.83 per share. 

 

Highlights 

Amazon's earnings growth was fueled by cost-cutting measures, operational enhancements in fulfilment, and stabilized cloud spending. Amazon Web Services (AWS) sales surged by 17% to USD25 billion, fueled by cost optimizations and growing demand for generative artificial intelligence (AI). The advertising unit experienced a remarkable 24% sales increase, outpacing the retail and cloud segments, becoming a significant profit driver. 

  

CFO Brian Olsavsky highlighted a planned increase in capital spending throughout the year, particularly focusing on AWS infrastructure and advancing AI capabilities. Amazon is investing upfront to build its AI offerings to meet customer demand, particularly as customers seek longer-term contracts. Despite these investments, Amazon forecasts Q2 revenue of USD144 billion to USD149 billion, slightly below market expectations of USD150.07 billion, with operating income projected to range from USD10 billion to USD14 billion, up from USD7.7 billion a year earlier. 

  

Amazon's share price increased by +68.87% year-to-date (1 year), and the last traded price was USD175.29. Bloomberg consensus rating has 68 Buys and 2 Holds, with a 12-month target price of USUSD215.19 

 

Advanced Micro Devices (AMD) announced quarterly earnings, beating the market estimate and providing a light forecast for Q2. 

 

Here’s a breakdown for you on what’s happening with Advanced Micro Devices: 

 

The Good News 

  • First-quarter revenue rise of 2.24% from a year ago to USD5.473 billion. 
  • Net profit attributable was USD1.01 billion, an increase of 4.43% compared to USD970 million.  
  • The GAAP earnings per share (EPS) were USD0.62 per share, up 3.33%, beating analysts' estimate of USD0.61 per share. 

 

Highlights 

Regarding business, AMD delivered robust Q1 results, with the Data Center and Client segments each growing more than 80% year over year, driven by the ramp of MI300AI accelerator shipments and the adoption of Ryzen and Epyc processors.  

 

However, uncertain demand from the gaming market has further hurt AMD. Personal computing and console gaming growth is expected to remain below pre-pandemic levels through 2026. Gaming revenue fell 48% to USD229 million. The company had forecast significant double-digit percentage declines in this segment as revenue from the chips it designs for gaming consoles.  

 

Additionally, the rush among enterprises to adopt generative AI has prioritized spending on AI server chips over traditional server semiconductors, impacting a substantial portion of AMD's revenue. CEO Lisa Su emphasized the industry-wide deployment of AI, which drives demand for enhanced computing across various markets, with plans to bolster the data center business and integrate AI capabilities across the product portfolio. 

  

Moving forward, for Q2, AMD expects revenue to be approximately USD5.7 billion, plus or minus USD300 million, slightly lower than the analyst's estimate of USD5.73 billion. AMD forecasts a gross margin of about 53% for Q2, just beating the estimate of 52.9%.  

  

AMD's share price increased by +76.15% year-to-date (1 year), and the last traded price was USD158.58. Bloomberg consensus rating has 49 Buys, 11 Holds and 1 Sells, with a 12-month target price of USD193.74 

 

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Sources: 

  1. https://www.cnbc.com/2024/04/30/amazon-amzn-q1-earnings-report-2024.html 
  2. https://www.reuters.com/technology/amazon-forecasts-quarterly-revenue-below-estimates-2024-04-30/#:~:text=Its%20shares%20have%20climbed%20about%2015%25%20in%202024%2C,cents%20per%20diluted%20share%20in%202023%27s%20first%20quarter. 
  3. https://ir.amd.com/news-events/press-releases/detail/1192/amd-reports-first-quarter-2024-financial-results  
  4. https://www.cnbc.com/2024/04/30/amazon-amzn-q1-earnings-report-2024.html