Latest news with #BedrockAgentCore
Business Insider
4 days ago
- Business
- Business Insider
Why Wall Street is Wrong About Amazon's (AMZN) Stock Dip
What a ride it's been! After a steady climb from April's lows to what looked like a new all-time high, Amazon stock (AMZN) got slammed on strong volume, following its Q2 earnings report, as investors reacted to cautious guidance and concerns over heavy AI-related spending. 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. But take a closer look, and the results tell a different story. Amazon delivered strong performance across domestic and international retail, AWS, and profitability. And at current levels, the stock still looks reasonably valued. That's why I'm staying Bullish with a view of buying the dip in AMZN stock. Retail Keeps the Engine Humming Investors tend to focus all their attention on AWS when assessing Amazon, yet its retail business, both in North America and internationally, showed some serious muscle in Q2. North America sales climbed 11% year-over-year to $100 billion, while the international segment surged 16% to $36.8 billion (11% when adjusted for currency swings). The company's 4-day 'Prime Day' event was a blockbuster, setting records for sales and new Prime sign-ups, proving Amazon still dominates in the e-commerce space. Notably, CEO Andy Jassy highlighted more thoughtful inventory placement, which cut delivery times and boosted customer satisfaction. Internationally, Amazon's pushing hard with same-day delivery expansions, reaching smaller cities and rural areas, which is paying off with faster growth than in North America. The deployment of AI across the shopping experience also appears to be bearing fruit. The company's AI-driven tools, such as a generative AI that reads product reviews aloud, are stimulating faster decision-making during shopping. It's very endearing that despite being a pretty mature business at this point, Amazon's retail arm isn't only growing but also continuously evolving, which, in my view, positions it for further market share gains, particularly as competitors like Temu face tariff challenges. AWS: The Cloud Keeps Soaring Of course, AWS remains the crown jewel, raking in $30.9 billion in Q2, up 17.5% from last year. Now look, this figure wasn't as impressive as the blistering growth of Microsoft's Azure (39%) or Google Cloud's (32%), but at the end of the day, AWS is still the big dog in cloud computing, with a $189 billion backlog signaling long-term demand. Jassy emphasized new AI offerings like Bedrock AgentCore and partnerships with heavyweights like PepsiCo (PEP) and Airbnb (ABNB), which are leaning on AWS for their cloud needs. Last week's earnings call also highlighted an interesting aspect of AMZN's business: custom silicon, such as its 'Trainium' custom AI chips, that have 'impressively emerged as the backbone for Anthropix newest generation cloud models,' according to Jassy. The CEO also noted that most IT spending still happens on-premise, but as companies shift to the cloud (especially for AI), AWS is poised to ride that rising trend. And despite some margin pressure from heavy AI investments, AWS's operating income still hit $10.2 billion, proving it's still a cash cow. Profitability Spikes Higher Speaking about operating income, Amazon's total operating income for the quarter jumped 31% to $19.2 billion, blowing past the $16.7 billion that analysts expected. North America's operating margin hit 7.5%, up 190 basis points, while the international segment's margin soared to 4.1%, a 320-basis-point leap. Advertising was a star here, with revenue up 22% to $15.7 billion, driven by sponsored products and new partnerships with Roku (ROKU) and Disney (DIS). More innovative logistics played a significant role, too. By optimizing inventory placement, Amazon effectively slashed outbound shipping costs while boosting delivery speeds, with unit growth outpacing shipping cost growth by a wide margin. CFO Brian Olsavsky also pointed to robotics and automation in fulfillment centers, which are driving down costs while handling higher volumes. In my view, these efficiencies, paired with high-margin businesses like AWS and ads, are turning Amazon into a leaner, meaner profit machine. Value Still Shines Despite AMZN's Guidance Jitters Last week's market tantrum was rather revealing. Amazon's Q3 outlook implied sales 10-13% growth and operating income of $15.5 billion to $20.5 billion, slightly above analyst midpoints but not the blowout some hoped for. Investors also seem to be nervous about the $100 billion AI spending spree and potential tariff impacts, which could squeeze margins if costs are passed to consumers. Jassy admitted tariff uncertainty is a wildcard, but I think that Amazon is diversifying its supply chain to keep prices low. In any case, I believe that at 33x this year's expected EPS, Amazon's stock looks rather reasonably priced against its growth trajectory. With AI investments set to fuel long-term growth in AWS and retail, this dip feels like a buying opportunity for patient investors. In the meantime, with EPS expected to grow between 15% and 20% per annum at least over the medium term, today's multiple offers a decent margin of safety, in my view. What is the Price Target for AMZN in 2025? There are 45 analysts offering price targets on AMZN stock via TipRanks — with an overwhelming bullish consensus. Currently, the stock carries a Strong Buy consensus rating based on 44 Buy and one Hold ratings over the past three months. At $265.16, AMZN's average stock target implies almost 25% upside over the next twelve months. Amazon's Post-Earnings Dip Means Attractive Prices Despite the post-earnings sell-off, Amazon's Q2 results reflect solid execution—strong retail growth, continued AWS dominance, and profitability firing on all cylinders. While cautious guidance and AI-related spending gave the market pause, the underlying numbers paint a much more positive picture. With a valuation that still looks reasonable and analysts projecting double-digit upside, this pullback could be a compelling opportunity to get in on a stock well-positioned for long-term growth.
Business Insider
7 days ago
- Business
- Business Insider
AI Daily: Amazon down after AWS growth didn't accelerate like peers
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 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.
