{"id":6183,"date":"2023-10-27T23:30:00","date_gmt":"2023-10-27T23:30:00","guid":{"rendered":"https:\/\/infundpros.com\/investment\/amazon-just-taught-wall-street-a-new-word-and-its-a-good-one-for-the-bulls\/"},"modified":"2023-10-27T23:30:02","modified_gmt":"2023-10-27T23:30:02","slug":"amazon-just-taught-wall-street-a-new-word-and-its-a-good-one-for-the-bulls","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=6183","title":{"rendered":"Amazon just taught Wall Street a new word \u2014 and it\u2019s a good one for the bulls"},"content":{"rendered":"
\n

Amazon.com Inc. investors wanted to hear talk of a \u201creacceleration\u201d in the company\u2019s cloud-computing business. Instead they learned a new word.<\/p>\n

It\u2019s no secret that cloud-computing customers have been \u201coptimizing\u201d their spending lately, or looking for ways to make workloads more efficient. So how is the optimization trend playing out for Amazon
\n AMZN,
\n +6.83%<\/bg-quote>
\n these days? It\u2019s \u201cmeaningfully attenuating,\u201d per Chief Executive Andy Jassy.<\/p>\n

\n

He dropped the \u201ca\u201d word \u2014 attenuate, and its derivatives \u2014 six times on Amazon\u2019s earnings call Thursday afternoon, according to a transcript provided by AlphaSense\/Sentieo. The recurrence of the term, which Merriam-Webster defines as a lessening, wasn\u2019t lost on Wall Street analysts.<\/p>\n

Don\u2019t miss: <\/strong>Amazon makes big progress on profits, and its stock heads higher<\/p>\n

Some even offered their own definitions. RBC Capital Markets analyst Brad Erickson titled his note to clients: \u201cAttenuate means \u2018good for AWS\u2019 (we looked it up).\u201d<\/p>\n

\u201cManagement did not provide a [quarter-to-date] guide for Q4 which indicates positively for stabilization & eventual re-acceleration,\u201d he wrote. Erickson noted that Amazon is seeing an \u201cattenuating\u201d pace of optimizations and a pickup in deal activity over the past few months, two things he deemed encouraging. <\/p>\n

He rates the stock outperform with a $180 target price. <\/p>\n

Opinion:<\/strong>\u00a0Amazon\u2019s AI talk is making Wall Street drool, but there seems to be a catch<\/p>\n

MoffettNathanson\u2019s Michael Morton was paying attention to the \u201cattenuation\u201d talk, as well.<\/p>\n

\u201cWe learned two things from Amazon\u2019s earnings. First, the definition of the word attenuate, and second, Amazon\u2019s newfound outlook for the cost structure of the business. We expect the latter will lead to investors materially increasing their estimates for profitability in FY24, as did we,\u201d he wrote. <\/p>\n

Morton added that Jassy merely \u201ctiptoed the line\u201d in terms of delivering the sort of commentary on a potential reacceleration in the AWS business that investors were hoping to hear.<\/p>\n

\u201cFor perspective, we signed several new deals in September with an effective date in October that won\u2019t show up in any GAAP reported number for Q3, but the collection of which is higher than our total reported deal volume for all of Q3,\u201d Jassy said on Thursday\u2019s call.<\/p>\n

That talk probably wasn\u2019t enough for tactical investors, who may continue to feel reliant on third-party data about AWS trends, according to Morton, who has a buy rating and $213 target on Amazon shares.<\/p>\n

The stock was up 6% in premarket trading Friday.<\/p>\n

While \u201cattenuate\u201d was the talked-about word coming out of Amazon\u2019s earnings call, the big number was perhaps $11.2 billion. That was Amazon\u2019s operating income for the quarter, up from $2.5 billion a year before.<\/p>\n

\u201cAmazon\u2019s Q3 operating margin was well above guidance, and unseasonably higher, due to greater efficiencies in the fulfillment network (regionalized footprint, process improvements), international margin improvement, services mix shift, and operating leverage at AWS (30% vs. 24% consensus),\u201d Baird analyst Colin Sebastian wrote, while keeping an outperform rating on the stock and boosting his share-price target to $160 from $155.<\/p>\n

Bernstein\u2019s Mark Shmulik thought there were three big debates coming into Amazon\u2019s earnings report, as investors were wondering about a possible AWS acceleration, the runway for operating income, and the competitive landscape in retail. Amazon didn\u2019t quite settle the score on AWS, and investors were probably still left with questions about whether there\u2019s pressure on the e-commerce business, but the profit talk was resounding, he reasoned.<\/p>\n

\u201cAmazon basically answered the Operating Income debate, blowing OI out of the water to record levels, and more impressively for us in the long game, six sequential quarters of operating income improvement in North America,\u201d wrote Shmulik, who rates Amazon shares outperform, with a $175 target.<\/p>\n

Read on: <\/strong>Microsoft \u2018has taken the AI mantel from Google\u2019 \u2014 and now it\u2019s coming for Amazon in the cloud<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Amazon.com Inc. investors wanted to hear talk of a \u201creacceleration\u201d in the company\u2019s cloud-computing business. Instead they learned a new word. It\u2019s…<\/p>\n","protected":false},"author":1,"featured_media":6184,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24],"tags":[],"class_list":{"0":"post-6183","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-investment"},"yoast_head":"\nAmazon just taught Wall Street a new word \u2014 and it\u2019s a good one for the bulls | inFundPros<\/title>\n<meta name=\"description\" content=\"Amazon.com Inc. investors wanted to hear talk of a \u201creacceleration\u201d in the company\u2019s cloud-computing business. Instead they learned a new word. 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