Amazon leads Dow after stellar earnings report

Amazon (AMZN) stock is best Dow Jones stocks Friday after the world’s largest e-commerce company beat top- and bottom-line expectations for the third quarter.

In the three months ended September 30Amazon’s revenue rose 11% year over year to $158.9 billion, boosted by 19.1% growth in its Amazon Web Services (AWS) cloud segment to $27.5 billion and an 18.8% increase in advertising sales to $14.3 billion. Its earnings per share (EPS) rose 52.1% year-over-year to $1.43.

“As we enter the holiday season, we’re excited about what we have in store for customers,” Amazon CEO Andy Jassy said in a statement. “We kicked off the holiday season with the biggest one ever First Big Deal Days and the launch of a new Kindle range that significantly exceeds our expectations.”

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The executive added that there’s plenty in the hopper for Amazon as well, including its NFL Black Friday game and Election Day coverage with Brian Williams on Prime Video. Jassy also said the company has 100 new cloud infrastructure and artificial intelligence (AI) capabilities that will be unveiled at Amazon’s AWS re:Invent the week after Thanksgiving.

The headline results beat analysts’ expectations. Wall Street had expected total revenue of $157.2 billion and earnings of $1.14 per share, according to CNBC. Meanwhile, advertising met expectations of $14.3 billion, and AWS revenue rose slightly above the estimate of $27.5 billion.

For the fourth quarter, Amazon said it expects revenue in the range of $181.5 billion to $188.5 billion, representing an increase of 7 percent to 11 percent from the year-ago period. The midpoint of that range, $185 billion, is slightly below analysts’ forecast for fourth-quarter revenue of $186.2 billion.

Is Amazon stock a buy, sell or hold?

Wall Street is bullish on Magnificent 7 stock and for good reasons. Amazon is up 31% for the year to date, easily outpacing the S&P 500’s 21% gain.

Conformable S&P Global Market Intelligenceaverage analyst price target for consumer discretionary stock is $227.86, representing an implied upside of over 14% from current levels. Furthermore, the consensus recommendation is a strong Buy.

Financial services firm Stifel is one of the most bullish on AMZN stock, with a buy rating and a $245 price target.

“Amazon is one of the main beneficiaries of Covid, given the accelerated growth of e-commerce sales and the adoption of Prime members, as well as the digital transformation that will accelerate the adoption of cloud services, which we expect to see in a time frame longer,” says the Stifel analyst. Mark Kelley.

And as a leader in these two fast-growing industries, “we believe Amazon remains well-positioned in a recovery scenario, given that cloud services, marketing services, and certain e-commerce categories and geographies are still in early stages of development”.