Big Tech is killing it in the first quarter. On April 29, Amazon delivered jaw-dropping results, maybe beyond the most bullish expectations.
The company posted impressive revenues of $108.5 billion and EPS of $15.79 that lavishly beat consensus of $9.64 and more than tripled year-over-year. Amazon stock ($AMZN) ended the day slightly higher during the regular session and up another +3% in after-hours trading.
Below are two takeaways from earnings day that summarize the company's performance and the stock's after-hours price action.
#1. AWS drives bullishness
Strength in AWS was probably the highlight, at a growth rate of 32% that very easily beat consensus by a good 10 percentage points, plus solid margins of over 30%. The rate of revenue increase accelerated sequentially quite a bit, which must have been a surprise to most Amazon analysts and investors.
This is probably the key reason why Amazon stock climbed in after hours, even after shares had spiked 13% in the past month alone. The market tends to pay remarkably close attention to the growth pace in the cloud business.
See table below, and notice the outstanding Q1 growth figures in column 2:
#2. Every quarter is a holiday
Amazon e-commerce is on fire. Online stores largely maintained last quarter's momentum, climbing 41% year-over-year. Physical stores, on the other hand, still seem heavily impacted by the pandemic, down -16%.
Third-party business remains robust – this is basically where the highest growth rates are, in North America e-commerce. Worth noting, op margins for the International and North America segments reached a six-quarter peak this time.
The combination of (1) a recovering economy, especially in the US, and (2) the COVID-19 pandemic that has been causing a shift in shopping habits favors online retailers. Among them, Amazon is a clear winner, possibly the top player.
Therefore, Q1 felt like another holiday period for the Seattle-based giant, as total quarterly revenues surpassed $100 billion only for the second time ever.
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