Amazon shares fell over 8% on Friday after the company reported slower online sales growth and increasing consumer demand for cheaper options
In anticipation of Walmart’s quarterly results later this month, the online purchasing behemoth’s commentary is consistent with recent consumer behavior prioritizing value.
During a post-earnings call, Andy Jassy, the CEO of Amazon, stated that consumers negotiated prices when they could.
Before the bell, the company’s shares traded at approximately $169. If the losses persist, Amazon is expected to experience a decline in market value of approximately $157 billion.
Michael Morton, an analyst at MoffettNathanson, stated that the consumer spending trends that retail rivals are experiencing have finally caught up with Amazon’s P&L.
The revenues of Amazon’s online stores increased by 5% to $55.4 billion in the second quarter, as opposed to a 7% increase in the first quarter.
Nevertheless, the company’s quarterly profit and cloud computing sales exceeded analysts’ expectations.
In the days following Microsoft’s Azure’s failure to meet market expectations and the subsequent escalation of apprehensions regarding the significant AI expenditures of Big Tech, Amazon Web Services, its cloud division, experienced a 19% increase in revenue to $26.3 billion, surpassing expectations.
Amazon, headquartered in Seattle, is currently catching up with its competitors, Microsoft and Google, in developing its own “large language models.” These models are capable of responding to complex queries or prompts in a nearly instantaneous manner. Microsoft and Google are partners with OpenAI.
According to LSEG data, Amazon’s forward price-to-earnings ratio for the next 12 months was 33.92, a common benchmark for valuing equities. Alphabet’s ratio was 20.46, and Microsoft’s was 30.88.
