E-commerce giant Amazon, Inc. is scheduled to report its second-quarter results Thursday after the market close.
What Happened: Ahead of the results, Dan Niles, founder and portfolio manager at Satori Fund said he is long on Amazon again.
Immediately after Microsoft Corp.’s quarterly results in late July, the fund manager said he sold Amazon stock at $129. He based the action on the readthrough Microsoft’s soft Azure revenue has for Amazon’s AWS Cloud business. He said then he could buy the stock back as his investment thesis was predicated on the retail business.
Niles also suggested he is optimistic about Amazon’s AI opportunity. He quoted comments from Amazon CEO Andy Jassy, who said in early July that there is a “high appetite now to ML, generative AI, and LLM training and interference that people are going to use as much compute as you can give them.”
The fund manager also suggested AWS could have fared better than Azure.
Long $AMZN again. Believe Q1 improvement in retail profits continued in Q2. Jassy 7/6/23- “There is such a high appetite right now to do ML, generative AI and LLM training and inference that people are going to use as much compute as you can give them.” AWS Q2 better than Azure? https://t.co/hS1YWVdmbG
— Dan Niles (@DanielTNiles) August 2, 2023
Why It’s Important: AWS is the leader in the cloud computing business, with a dominant 32% share of the global cloud market in the first quarter. Microsoft Azure and Alphabet, Inc.’s Google Cloud boasted 23% and 10%, market share, respectively.
AWS is a key business for Amazon as it has relatively high margins than the company’s core retail business and contributes the bulk of the operating profit.
The e-commerce retailer is expected to report second-quarter earnings per share of $0.32, reversing from a loss of $0.20 a year ago. The top line, however, is expected to slip 1.4% year-over-year to $119.57 billion.
Smaller rival Shopify, Inc. reported Wednesday better-than-expected second-quarter results and issued upbeat revenue guidance for the third quarter.
Amazon closed Wednesday’s session at $128.21, down 2.64%.
Produced in association with Benzinga
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