Returning to the Top? Amazon's Q2 Earnings

Returning to the Top? Amazon's Q2 Earnings ...

Get Amazon.com Inc. Reportinvestors have been riding a rollercoaster over the previous two years. The stock climbed 74% in 2020. But then it went sideways, growing less than 3% in 2021.

The stock appeared to be in free fall until the company reported its second-quarter (Q2) results for 2022. It had lost 36% since the beginning of the year, enough to send it back to pre-pandemic levels.

Amazon's quarterly earnings, which beat analyst expectations on Thursday, have since risen by more than 10%.

Today, Amazon Maven discusses the earnings call for the e-commerce behemoth. What was good? What could have been better? And, what should you expect in the second half of 2022?

Amazon's Q2 Revenues: Rejuvenating to the Top?

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(Read more from Amazon Maven: Was Amazon Prime Day sufficient to save the quarter?

Cloud Computing and Advertising: Even Better Than Market Forecast

Amazon Web Services (AWS), Amazon's cloud computing business, appears to be not only recession-proof, but also capable of surprised analysts. Revenue increased by 33%, while operating income increased by 28%. That was nearly enough to save Amazon's bottom lines.

There was a nice surprise in Amazon's advertising business. The company's acquisition into Google's (GOOGL) - Get Alphabet Inc. Reportterritory grew 18% year over year in terms of revenue.

Amazon might be generating an even greater revenue stream than its computing unit, given Meta's (META) - Get Meta Platforms Inc. Report

Profit Loss: Not as Bad as Market Expected

The reason for a large part of Amazon's negative sentiment comes from concerns about its business in an inflationary scenario.

Investors were expecting poor growth in the company's top lines and high operational costs in its bottom lines.

Analysts forecast $119 billion in net sales for the quarter. However, Amazon exceeded expectations, surpassing expectations for the quarter, bringing in $121 billion in revenue.

Amazon would have made a profit if we eliminated the losses from its Rivian (RIVN) investment.

This isn't to say that the company has overcome its headwinds. Nevertheless, these are good signs.

Despite persistent inflationary pressures in gasoline, energy, and transportation costs, Amazon CEO Andy Jassy said the company was making progress on the more manageable costs we discussed last quarter, particularly improving the efficiency of our fulfillment network.

Bullish Perspectives on the Future

Amazon's stock is solid for future growth, as previously discussed by the Amazon Maven. However, investors should not expect short-term gains.

Holding Amazon exclusively for the short term is a bad move, for two reasons:

The good news is that Amazon might be a great long-term stock because it is poised to lead both the e-commerce and the cloud computing sectors, both of which are rapidly growing.

Amazon's stock might hit the jackpot once the current macroeconomic headwinds have passed.

(Disclaimers: this is not investment advice. The author may be long one or more of the items mentioned in this report. Also, the article may include affiliate links. These partnerships do not affect editorial content.)

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