Amazon’s AMZN third-quarter 2024 results, scheduled to be released on Oct. 31, are likely to reflect gains from its strengthening cloud service offerings.
AMZN’s cloud computing division, Amazon Web Services (“AWS”), dominates the cloud market on the back of its growing adoption and popularity. This is anticipated to be reflected in the company’s third-quarter results.
We note that the solid momentum across AWS has been aiding Amazon in generating high margins from the cloud business. The trend is expected to have continued in the to-be-reported quarter.
AWS’ revenues were $26.3 billion, accounting for 18% of net sales in second-quarter 2024, rising 19% year over year. We further note that its operating income was $9.3 billion, up 74% year over year.
The Zacks Consensus Estimate for third-quarter 2024 AWS sales is pegged at $27.5 billion, indicating an improvement of 19.5% from the year-ago quarter’s reported figure.
Click here to know how the company’s overall third-quarter performance is likely to have been.
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Factors to Note
A strong cloud services portfolio and expanding generative AI capabilities are expected to have aided the performance of AWS in the third quarter.
In the quarter under review, AWS announced the general availability of its new managed service called AWS Parallel Computing Service, which enables customers to build scientific and engineering models and seamlessly manage high-performance computing infrastructure.
Amazon launched AWS GenAI Lofts, collaborative spaces and immersive experiences for startups and developers, offering key AI hotspots, workshops and hands-on programming from AI experts, community groups and AWS partners.
Amazon introduced AWS App Studio, a generative AI-powered service that uses natural language to create enterprise-grade applications. The service allows technical professionals without software development skills to quickly build secure, fully managed applications, thereby reducing operational expertise and allowing them to focus on business problem-solving.
On the back of portfolio strength, AWS is likely to have witnessed solid customer momentum in the third quarter. AWS teamed up with Digital Domain to scale the latter's Autonomous Virtual Human Technology and help in introducing Generative AI-powered features.
AWS was selected by the Central Japan Railway Company. The latter is using AWS' Internet of Things, machine learning (ML) and GenAI capabilities to drive efficient operations for its next-generation, high-speed train service.
AWS was picked by Gold Fields GFI. The latter shifted its end-to-end SAP and treasury systems to AWS. Gold Fields is also leveraging AWS’ analytics, ML and GenAI solutions to modernize technology infrastructure.
Amazon partnered with GE HealthCare GEHC to allow the latter to use its healthcare and generative AI services to help clinicians improve medical diagnostics and patient care.
AWS is gaining significantly from the solid adoption of Amazon Bedrock. In the third quarter, AWS entered into a five-year partnership with Smarsh. Per the terms, the latter strives to enhance its offerings for the financial services industry by leveraging Amazon Bedrock.
We note that the strengthening customer base is likely to have driven AWS' top-line growth in the third quarter. It is also expected to have aided Amazon, which currently carries a Zacks Rank #3 (Hold), in sustaining its cloud dominance against its strong contenders like Microsoft and Alphabet GOOGL. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
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