A day after Facebook (FB) told Wall Street analysts to expect slower growth for the rest of 2018 (and saw its stock plunge 18.96%) Amazon (AMZN) beat Wall Street earnings projections by a massive $2.58 a share, reporting earnings for the second quarter of $5.07 versus Wall Street projections for $2.49. Revenue of $52.9 billion was slightly short of the Wall Street consensus of $53.55. Revenue grew 39% in the quarter from the second quarter of 2017.
The star this quarter was once again Amazon’s cloud business with revenue at Amazon Web Services growing to $6.1 billion from $4.1 billion in the second quarter of 2017. Growth for this unit of 49% for the quarter actually ticked higher from the 47% growth in the first quarter of 2018. Growth in Amazon’s still small advertising business climbed too with revenue from “other businesses,” which is mostly advertising sales, gaining 129% to $2.2 billion. That was actually slightly lower than first quarter growth.
Amazon projected third quarter sales of $54 billion to $57.5 billion, slightly below analyst expectations for $58 billion in revenue.
What’s most impressive to me about the quarter is that Amazon was able to generate that huge growth in net income even while investing in new services and businesses such as PillPack and Whole Foods. The company hasn’t always been so focused, shall we say, on the bottomline in its search for top-line growth.
Amazon shares were up 3.5% in after-hours trading. Coming after today’s huge sell off in shares of Facebook, the earnings news from Amazon is likely to limit the damage to the general market from the Facebook plunge. But nonetheless, we’ve now had big negative news from Netflix (NFLX) and Facebook, two of the classic FANG growth stocks. That’s more narrowing of leadership in this bull market.
