Amazon Stock Earnings: AMZN sags 5% on AWS revenue miss

• Amazon stock fell 5% on EPS miss and slowing cloud growth.
• Amazon reported net revenue $3.4 billion ahead of forecasts.
• AWS grew 20% YoY at the same time that Azure grew 31% YoY.
• Support for AMZN stock sits at $101 and $93.

Amazon (AMZN) stock fell 5.1% afterhours on Thursday as the premier online retailer missed earnings per share (EPS) overall for the quarter ending in December and saw growth in its cloud division drop to 20%. The market appeared tired of Amazon's inability or unwillingness to produce significant profits, and AMZN saw foreign revenue drop 8% YoY, although all of that was due to foreign currency exchange rates. 

Apple (AAPL) and Alphabet (GOOGL) both saw their share prices drop on flagging earnings reports as well.

Amazon stock earnings news

Amazon produced adjusted EPS of $0.03, 14 cents below consensus from Wall Street. Net income was hurt by a $2.3 billion loss on the value of its stake in electric vehicle firm Rivian (RIVN). Overall net revenue of $149.2 billion was well ahead of expectations for $145.8 billion and rose nearly 9% YoY. However, online net sales of $64.5 billion missed their market by $500 million.

Amazon Web Services, the leading cloud provider, reported sales of $21.3 billion – $460 million below the average forecast. This meant that YoY growth for AWS slowed to 20%, well below the 27.5% reported in the third quarter. This was a bad showing since just last week rival Microsoft (MSFT) reported that its second-place Azure cloud offering saw revenue rise 31% YoY in the quarter ending in December. This means that Microsoft is probably taking more market share for itself, while AWS is beginning to see its 34% market share slide.

"Starting back in the middle of the third quarter of 2022, we saw our year-over-year growth rates slow as enterprises of all sizes evaluated ways to optimize their cloud spending in response to the tough macroeconomic conditions," said CFO  Brian Olsavsky.

Source: Amazon

CEO Andy Jassy was undeterred by talk of a slow-down at AWS: “The vast majority of total market segment share in both Global Retail and IT still reside in physical stores and on-premises datacenters; and as this equation steadily flips, we believe our leading customer experiences in these areas [...] will lead to significant growth in the coming years.”

Jassy has received criticism from analysts in the past for skipping out on earnings calls since taking over from founder and former CEO Jeff Bezos in early 2021.

Sales in North America saw a quite impressive 13% rise YoY, but Jassy added that new geographies like India and Turkey were beginning to show results and would help the international division grow in the future.

Amazon stock forecast

AMZN stock dropped 5.1% to $107.18 but traded as low as $105.45 at its nadir afterhours. Interestingly, a brief spike in the share price saw AMZN stock reach $117.38 before again selling off. The 4-hour chart below shows that AMZN is once again stuck inside the $101 to $109.50 demand zone that should act as support. Bulls may seek entry at $101 if they think Thursday's gang of FAANG misses will not lead to a course correction in the market.

Otherwise, if you do think poor quarters for Apple, Amazon and Alphabet will lead to a pronounced sell-off, expect Amazon stock to get pushed down to $93. This price level held up twice in the last third of January.

AMZN 4-hour chart