Amazon earnings skyrocket on cloud computing, advertising

Amazon earnings skyrocket on cloud computing, advertising

Amazon shares have climbed 55 percent since the beginning of the year, while the Standard & Poor's 500 index has increased 6 percent.

According to the research firm eMarketer, Amazon's e-commerce revenue will grow more than 28 per cent this year to reach US$394 billion, and will account for 49 per cent of U.S. online retail sales and almost five percent of all retail spending.

The Seattle-based tech giant posted net income of $2.5 billion in the second quarter, or $5.07 per diluted share.

In the first quarter, Amazon ad sales topped $2 billion for the first time.

About half of the company's quarterly revenue came from its flagship e-commerce business, which delivered $27.2 billion in the second quarter.

Amazon, which accounts for about half of the online retail sales in the USA, has "the most robust and durable growth outlook" of any company in the FAANG group, which includes Facebook (FB), Apple (AAPL), Netflix (NFLX), and Alphabet's Google (GOOGL), Canaccord Genuity analyst Michael Graham wrote in a note to investors this month.

"We've seen a greater-than-expected efficiency in a lot of our spend in things like warehouses, data centers, marketing", Reuters quoted him as saying.

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Second-quarter revenue was US$52.9 billion, slightly missing analysts' expectations, too.

'A big contributor to the quarter and the last few quarters obviously has been strong growth in our highest profitability businesses and also advertising, ' Amazon CFO Brian Olsavsky said on a call with analysts.

On a call with investors, Amazon continued to tout the success of Prime Day, a 36-hour shopping event that kicked off on July 16 and has gradually become a bonafide event to rival Black Friday.

The firm said it would raise the price of Prime memberships in the USA by $20, but that doesn't seem to have deterred consumers. "This will help Amazon not only to curate product selection in-store, but it will give them better insights into what online shoppers might buy".

Chief executive and founder Jeff Bezos, whose Amazon stake has made him the world's richest person, used the quarterly update to highlight Alexa, the digital assistant that powers Amazon electronics along with cars, appliances and other connected devices.

The top-selling item in the USA was the Instant Pot, while the Bosch cordless drill took the title in the UK. "We're seeing strong adoption across a number of fronts".

One of Amazon's revenue drivers is its Prime subscription service which offers streaming video and music, free delivery and other perks and which has more than 100 million members worldwide.

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