AI Daily: Amazon down after AWS growth didn't accelerate like peers

Business Insider

3 days ago

Catch up on the top artificial intelligence news and commentary by Wall Street analysts on publicly traded companies in the space with this daily recap compiled by The Fly:
Elevate Your Investing Strategy:
Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
AMAZON: Amazon (AMZN) reported Q2 EPS of $1.68 and Q2 revenue $167.7B, both above consensus of $1.33 and $162.11B, respectively. Andy Jassy, President and CEO of Amazon, said 'Our conviction that AI will change every customer experience is starting to play out as we've expanded Alexa+ to millions of customers, continue to see our shopping agent used by many millions of customers, launched AI models like DeepFleet that optimize productivity paths for our 1M+ robots, made it much easier for software developers to write code with Kiro (our new agentic IDE), launched Strands to make it easier to build AI agents, and released Bedrock AgentCore to enable agents to be operated securely and scalably. Our AI progress across the board continues to improve our customer experiences, speed of innovation, operational efficiency, and business growth, and I'm excited for what lies ahead.'
Despite beating on the top and bottom lines in Q2 and offering a better-than-expected Q3 revenue outlook of $174B-$179.5B, the stock underperformed, which analyst said could be related to the company's guidance for operating income of $15.5B-$20.5B for Q3, which was worse at the midpoint than the expected $19.5B.
Following the report, RBC Capital raised the firm's price target on Amazon.com to $240 from $230 and keeps an Outperform rating on the shares. The company had a mixed print and an even tougher conference call, the analyst tells investors in a research note. Positively, the retail business is firing on most if not all cylinders, but at AWS, growth didn't really accelerate like peers, margins missed and management's commentary on the call did little to attenuate investor fears that AWS may have a bigger structural issue in capturing its fair share of the growth from AI, RBC added.
In its own post-earnings note, Stifel lowered the firm's price target on Amazon to $260 from $262 and keeps a Buy rating on the shares. Corporate-level Q2 results were 'very healthy,' with revenue and operating income both above the high-end of the guided range, while Q3 guidance was 'mixed,' with revenue ahead of expectations and lighter-than-expected operating income, the analyst tells investors. However, stable revenue growth at AWS was a disappointment after heightened expectations heading into the print with Microsoft's (MSFT) Azure and Google's (GOOGL) GCP both posting about 400 basis points of acceleration this past quarter, the analyst added.
JASSY SAYS: Jassy said, 'Automation and robotics are also important contributors to improving cost efficiencies and driving better customer experiences over time. We deployed our one millionth robot across our global fulfillment network and unveiled innovations at our last mile innovation center, such as automated package sorting and a transfer transformative technology that brings packages directly… We rolled out Deepfleet our AI moves robot travel efficiency by 10% At our scale, that's a big deal. Deepfleet acts like a traffic management system to coordinate robots' movements to find optimal paths and reduce bottlenecks. For customers, it means faster delivery times and lower costs. For our team members, our robots handle more of the physically demanding tasks making our operations network even safer. This combination of robotics and generative AI is just getting started, And while we've made significant progress, it's still early respect to what we'll roll out in the next few years.'
CEO Jassy also stated, 'Our custom AI chip Trainium two is landing capacity in larger quantities and has improved impressively emerged as the backbone for Anthropix newest generation cloud models and many of our most essential offerings like Amazon Bedrock. We've also launched Amazon EC two instances powered by NVIDIA Grace Blackwell Superchips AWS's most powerful NVIDIA GPU accelerated instance. Second, in Bedrock, we've recently added Anthropix Cloud four and it's the fastest growing model ever in Bedrock. We've also continued to see strong adoption of Amazon Nova, our own frontier model, and it's now the second most popular foundation model in Bedrock. New features in Nova allow customers to customize their Nova models in ways they can't on other foundation models. Allowing organizations to infuse these models with their unique expertise while optimizing for cost and speed. As people have become excited about building agents, they're realizing they lack the tools to build them. In May, we released strands, an open source way to more easily build agents that's taken off with a wide range of customers already 2,500 stars in GitHub and over 300,000 downloads on PYPI. Customers are also struggling with deploying agents into production in a secure and scalable way. It's holding up enterprises scaling agents. To help solve that problem, Bedrock just released agent core. AgentCore is a set of building blocks that gives customers the industry's first secure serverless runtime to provide both synchronous and asynchronous execution. Agent identity and boundaries, a memory service, a gateway that translates services to MCP compatible interfaces, built in code execution and web browser tools, and an observability service. Customers are excited about Agent Core, and it frees them up to start deploying agents more expansively. Third, you're starting to see AWS release more powerful applications at the top layer of the AI stack.'
VAST DATA: Alphabet's (GOOG, GOOGL) growth-stage venture arm CapitalG and Nvidia (NVDA) are in talks to invest in artificial intelligence infrastructure provider Vast Data in a new funding round that could value the startup as high as $30B, two sources said, Reuters' Krystal Hu, Max A. Cherney and Milana Vinn report. The startup is raising several billion dollars from tech giants, private equity and venture capital investors, which could make it one of the most valuable AI startups, the two sources with knowledge of the matter said, as companies building the backbone for the AI boom come into sharper focus.
BUY REZOLVE AI: Alliance Global Partners initiated coverage of Rezolve AI (RZLV) with a Buy rating and $8.50 price target. The firm's contacts indicate Rezolve AI's conversational artificial intelligence technology is among the two or three best technologies focused on e-commerce. The company has already signed enough new business to exit the year at a $70M annual revenue run rate, Alliance Global tells investors in a research note. Online retail will benefit from AI and Rezolve is positioned to capitalize on this 'mega trend,' contends the firm.