Amazon ETFs Cheer Tech Giant's Strong Earnings

Amazon ETFs Cheer Tech Giant's Strong Earnings

AWS is on track to generate $100 billion in revenues this year.

sumit
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Senior ETF Analyst
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Reviewed by: etf.com Staff
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Edited by: James Rubin

Amazon.com Inc. shares gained more than 2% on Wednesday after reporting earnings that handily beat analyst estimates. 

The company made $0.98 per share in earnings on $143.3 billion in revenues. That was ahead of the $0.83 and $142.6 billion, respectively, that analysts were expecting. Amazon's share price was more recently up 1.6%. 

Amazon has a massive weighting in many exchange-traded funds. For instance, the $19 billion Consumer Discretionary Select Sector SPDR Fund (XLY) and the $94 million ProShares Online Retail ETF (ONLN) each hold around a quarter of their portfolio in the stock.

However, despite being classified as a consumer discretionary company under the Global Industry Classification Standard due to its enormous retail platform, it was Amazon’s cloud business that powered the shares higher on Wednesday. 

Revenues for Amazon Web Services (AWS) jumped 17% year-over-year in the first quarter, an acceleration from 13% in Q4.

AWS generated $25 billion in sales during the first three months, putting it on track to exceed $100 billion in revenues this year. 

“The combination of companies renewing their infrastructure modernization efforts and the appeal of AWS’s AI capabilities is reaccelerating AWS’s growth rate,” said Andy Jassy, Amazon President and CEO. 

Tepid Q2 Sales?

AWS’s strength helped offset tepid guidance for Amazon’s overall Q2 sales.

Amazon forecast that net sales would be between $144 billion and $149 billion in the second quarter, which is below the $150.2 billion that analysts were expecting. 

Still, analysts were generally upbeat following Amazon’s latest earnings report. 

“AWS acceleration should provide incremental confidence about forward growth as lion’s share of optimizations completed with focus turning to new initiatives,” wrote analysts at Morgan Stanley, who raised their price target on the stock to $220. 

Meanwhile, analysts at Baird, who have a $210 price target on the stock, said that “improvements in fulfillment efficiency should provide ongoing Retail margin tailwinds.” 

Shares of Amazon are up 18% so far this year, beating the 6% gain for the SPDR S&P 500 ETF Trust (SPY).

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.