Amazon shares surged after Q3 earnings report

Amazon CEO Andy Jassy speaks during the New York Times DealBook Summit in the Apple Room at Jass at Lincoln Center on Nov. 30, 2022 in New York City.

Michael M. Santiago | Good pictures

Amazon shares rose more than 6% on Friday after the company posted third-quarter earnings that beat analysts’ estimates and showed the company’s cost-cutting efforts are working.

Amazon’s revenue rose 13% to $143.1 billion in the third quarter. The company’s net income more than tripled to $9.9 billion, or 94 cents a share, from $2.9 billion, or 28 cents a share, a year earlier. Amazon’s earnings per share of 94 cents beat Wall Street’s expectation of 58 cents.

CEO Andy Jassy has spent the past year on a cost-cutting regime to address high inflation and rising interest rates. Amazon has made the largest layoffs in its history, cutting 27,000 jobs since last fall. The company froze corporate hiring, and Jassi tried to cut costs in units across the company.

Amazon posted an operating margin of 7.8%, its highest since hitting a record high of 8.2% in the first quarter of 2021. The company’s operating margin in the third quarter represented a significant increase over the 2% margin reported a year ago.

“With visibility into AWS acceleration and clear LT AI tailwinds, we remain bullish on AMZN, supported by continued improvements in the margin profile, which will impact the model over time,” Jefferies analysts said in a note to investors on Friday.

Player analysts said Amazon “handily” beat expectations for the quarter and saw real improvement in operating income growth. They said the company is “taking back control of the AI ​​narrative being created” and saw positive signs around AWS’s growth rate.

“We believe the stock offers defensive positioning in a bearish market given the model’s long-term growth and earnings power, with more embedded options in forms such as grocery, healthcare and satellite technology,” they wrote on Friday.

At Goldman Sachs, analysts said they viewed the company’s third-quarter report as “beat across the board,” although some questions remain about the nature of AWS’s re-acceleration and global consumerism.

They added that Amazon’s risk versus reward is “heavily skewed in the positive direction.”

“Looking at the multi-year time frame, we reiterate our view that Amazon will combine a mix of solid earnings trajectory with expanding margins as it delivers yield/earnings over multi-year investment cycles,” they wrote in a Friday note.

–CNBC’s Michael Bloom and Annie Palmer contributed to this report

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