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Amazon triples profit in bumper earnings

Earnings season ramps up this week with Amazon tripling quarterly profit, Apple announcing a record-breaking share buyback programme and Google declaring its first-ever dividend.

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But first, the macro wrap-up:

Predictably, the Fed said it’s not ready to cut interest rates, but also stated it won’t hike them either. The market remains relatively unchanged, with the S&P 500 down 0.6% this week.  Despite the lack of market moves, a largely positive earnings season has boosted market sentiment heading into next week. 

Amazon’s profit triples 🛒

Net income hits 11 figures: On Tuesday, Amazon reported its Q1 earnings where net income more than tripled from this point a year ago, from $3.2bn to $10.4bn. 

  • On cloud nine: Revenue for Amazon Web Services (AWS) accelerated 16% to $25bn, as businesses flock to generative AI services, which AWS supplies. It’s particularly exciting for investors, given Amazon’s cloud division had slowed throughout last year. 

  • Guidance looks good: Since 2022, Amazon has laid off 27,000 employees to help with profitability. Heading into Q2, the retail giant expects operating income to continue to improve, hitting between $10 to $14bn, up from $7.7bn a year earlier.

Apple surges 7% 🍏

Stock’s up, revenue’s down: Last night, Apple shares popped after it reported its fiscal Q2 earnings. Although revenue was down, shares still climbed. 

  • A $110bn buyback: The tech giant announced that its board authorised a $110bn share repurchase programme; the largest in its history and a 22% increase over last year’s $90bn buyback. Apple also upped its dividend by 4% to $0.25 a share.

  • The iPhone’s lagging: iPhone sales fell 10% as Apple’s struggles in China continue. This contributed to overall revenue falling 4% to $90.75bn, although this still outperformed Wall Street’s expectations of $90bn for the quarter.

Google climbs 8% 🔎

Google’s gAIns: Alphabet, Google’s parent company, is still riding the wave of last week’s positive set of earnings. Revenues rose to $80.5bn from $69.8bn the previous year, beating analysts’ estimates of $79bn. CEO Sundar Pichai said Google is “well underway with our Gemini era”, and has confidence in its AI infrastructure and positioning. 

  • $70bn buyback: Google is feeling pretty confident right now. So confident, in fact, it’s buying $70bn worth of its own shares back off the market. But, that’s not all that had investors excited…

  • First-ever dividend: In Google’s 26 years of operation, it hasn’t paid a single dividend to investors. But, that’s set to change as it’ll start paying $0.20 per share owned to investors, on June 17th. It seems paying dividends is in fashion for big tech. 

What have we learnt this week? 🤓

  • Amazon’s focused on operating income: So far this year, Amazon has already laid off hundreds of employees across its health and AWS businesses, in an effort to improve profitability for 2024. 

  • Earnings season has been positive: Apple is the latest of the major companies to report quarterly earnings. Overall, this season has been positive, with most companies seeing a boost in share price. 

  • Buybacks and dividends are market movers: We’ve seen it with Apple and Alphabet this week – investor excitement grows when companies integrate these programmes.

Stock announcements 👀

Here are the key earnings dates to look out for next week:

  • Monday 6th May: Palantir, Lucid

  • Tuesday 7th May: Disney, Rivian 

  • Wednesday 8th May: Shopify, Uber

  • Thursday 9th May: Roblox

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*Figures and ratings correct as of 2nd May 2024.

Past performance does not guarantee future results. Capital at risk when investing. This content is for educational purposes only. Shares does not provide investment advice. If you are unsure about anything, please seek advice from an authorised financial advisor.

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James Ashoo

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