Latest news with #DougAnmuth
Yahoo
4 days ago
- Business
- Yahoo
JPMorgan drops 3-word verdict on Amazon stock post-earnings
JPMorgan drops 3-word verdict on Amazon stock post-earnings originally appeared on TheStreet. Amazon () posted a superb Q2 on paper, but the market was mostly unfazed. Shares pulled back sharply, with investors fixating on Amazon Web Services (AWS) relatively lagging in growth. However, in that cloud of concern (no pun intended), JPMorgan sees an opening, not noise. 💵💰💰💵 Veteran Analyst Doug Anmuth's call effectively cuts through the volatility, while putting fresh focus on how Wall Street's top desks are interpreting Amazon's long-term AI and infrastructure story. Amazon's big AI bet tests investor patience Amazon's Q2 results showed a clear contrast in booming top-line expansion, massive investment on one side, and investor unease on the other. Overall sales jumped a superb 13% amounting to $167.7 billion, beating estimates by an eye-popping $5.60 net income surged, with a $1.68 EPS, blowing past estimates by 36 cents. However, all eyes were on AWS sales, which were relatively uninspiring. AWS sales grew 17.5% to $30.9 billion, but remarkably lagged the headline-grabbing growth at competitors. Putting things in perspective, Microsoft Azure posted a 39% jump, while Google Cloud surged 32%, reinforcing fears that AWS may be losing ground in the AI cloud race. Margins told a similar story. AWS operating margin fell sharply to 32.9%, down from 39.5% the prior quarter. Management attributed the squeeze to its aggressive GenAI investments and infrastructure hiccups, particularly with power, chip supply, and server yields. What turned heads, though, was the spending. Amazon's capital expenditures came in at a record $31.4 billion, up close to 90% year-over-year. That's a remarkably high number, especially with management calling it 'reasonably representative' of what's to come in the back half of the year. However, the goal at this point is clear, and it involves scaling AWS's infrastructure quick enough to support AI ambitions and relieve capacity strain. Wall Street wasn't sold, with concerns centering around AWS's slower growth, thinner margins, and unclear near-term return on the hefty capex. Still, CEO Andy Jassy defended the strategy. He emphasized that Amazon is still in the early innings of its powerful multi-year AI journey and that capacity constraints will ease as new infrastructure comes online. JPMorgan's three-word response on Amazon stock: Buy the pullback As previously mentioned, Amazon may have delivered on paper, but the market didn't see it that way. Amazon stock tanked over 8% on Aug. 1, but it clawed back some of those losses pre-market Aug. 4. Still, the initial drop raises some major questions. Nevertheless, one top voice on the Street isn't analyst Doug Anmuth at JPMorgan feels the dip is exactly when investors should move in. He feels investors should 'Buy the pullback,' backing up his Buy rating on Amazon stock, while boosting his price target from $255 to $265, implying a superb upside of 23% from current levels. So what triggered the drop? According to Anmuth, the culprit was AWS. While AWS revenue jumped 17.5% year-over-year to $30.9 billion, it underwhelmed investors who expected more, especially considering the backdrop of AI-fueled cloud expansion. That's not all. Amazon also reported a record $31.4 billion in capex, which only made matters worse in compounding the pressure on AWS to deliver even bigger growth numbers. Still, the Street isn't backing off. Analysts at Citi also bumped their price target on the stock to $270, noting Amazon's higher spending reflects healthy demand and efforts to fix infrastructure constraints in the cloud. However, it's important to consider that growth lagged peers, and management didn't exactly calm concerns around the AI opportunity. Despite that, the Wall Street punditry believes the selloff doesn't match the broader story. And for JPMorgan, this is the kind of dip worth loading up on. AWS: Amazon's profit engine and AI powerhouse AWS is far from purely a segment; it's arguably the profit core and strategic anchor for the entire business. It's responsible for close to 60% of Amazon's operating income, with AWS running at an annualized sales pace above $123 billion. That scale gives it the profile of a standalone cloud giant, one that underpins the bulk of Amazon's enterprise Andy Jassy has reiterated AWS's incredible competitive moat, noting it's still 'meaningfully larger' than its next-closest rival. Recent data supports that lead. Per the most recent reports, AWS commands roughly 31% to 32% of the global cloud infrastructure market, followed closely by Microsoft Azure with roughly 22.5% to 24%, and Google Cloud at 10% to 12%. Other estimates tend to vary based on methodology, but generally confirm AWS's position at the top, with competitors trailing by a hefty margin. AI is rapidly deepening that role. AWS is investing a ton of money in generative and agentic AI, in serving external clients through the Generative AI Innovation Center. Another key differentiator for AWS is that it effectively originates from Amazon's internal infrastructure needs before commercialization. It comes with embedded efficiency and noteworthy cash-flow sustainability, making it more than a cost center, powering internal tools like Amazon Personalize. That synergy creates a robust loop where AI sharpens retail engagement and fuels more demand for compute. More News: Amazon's quiet pricing twist on tariffs stuns shoppersBank of America flags 3 breakout stocks to watch ahead of earnings Margins may have compressed recently on the back of AWS building its custom infrastructure, including Trainium chips, but those bets are about long-term dominance. JPMorgan drops 3-word verdict on Amazon stock post-earnings first appeared on TheStreet on Aug 4, 2025 This story was originally reported by TheStreet on Aug 4, 2025, where it first appeared. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 days ago
- Business
- Yahoo
JPMorgan drops 3-word verdict on Amazon stock post-earnings
JPMorgan drops 3-word verdict on Amazon stock post-earnings originally appeared on TheStreet. Amazon () posted a superb Q2 on paper, but the market was mostly unfazed. Shares pulled back sharply, with investors fixating on Amazon Web Services (AWS) relatively lagging in growth. However, in that cloud of concern (no pun intended), JPMorgan sees an opening, not noise. 💵💰💰💵 Veteran Analyst Doug Anmuth's call effectively cuts through the volatility, while putting fresh focus on how Wall Street's top desks are interpreting Amazon's long-term AI and infrastructure story. Amazon's big AI bet tests investor patience Amazon's Q2 results showed a clear contrast in booming top-line expansion, massive investment on one side, and investor unease on the other. Overall sales jumped a superb 13% amounting to $167.7 billion, beating estimates by an eye-popping $5.60 net income surged, with a $1.68 EPS, blowing past estimates by 36 cents. However, all eyes were on AWS sales, which were relatively uninspiring. AWS sales grew 17.5% to $30.9 billion, but remarkably lagged the headline-grabbing growth at competitors. Putting things in perspective, Microsoft Azure posted a 39% jump, while Google Cloud surged 32%, reinforcing fears that AWS may be losing ground in the AI cloud race. Margins told a similar story. AWS operating margin fell sharply to 32.9%, down from 39.5% the prior quarter. Management attributed the squeeze to its aggressive GenAI investments and infrastructure hiccups, particularly with power, chip supply, and server yields. What turned heads, though, was the spending. Amazon's capital expenditures came in at a record $31.4 billion, up close to 90% year-over-year. That's a remarkably high number, especially with management calling it 'reasonably representative' of what's to come in the back half of the year. However, the goal at this point is clear, and it involves scaling AWS's infrastructure quick enough to support AI ambitions and relieve capacity strain. Wall Street wasn't sold, with concerns centering around AWS's slower growth, thinner margins, and unclear near-term return on the hefty capex. Still, CEO Andy Jassy defended the strategy. He emphasized that Amazon is still in the early innings of its powerful multi-year AI journey and that capacity constraints will ease as new infrastructure comes online. JPMorgan's three-word response on Amazon stock: Buy the pullback As previously mentioned, Amazon may have delivered on paper, but the market didn't see it that way. Amazon stock tanked over 8% on Aug. 1, but it clawed back some of those losses pre-market Aug. 4. Still, the initial drop raises some major questions. Nevertheless, one top voice on the Street isn't analyst Doug Anmuth at JPMorgan feels the dip is exactly when investors should move in. He feels investors should 'Buy the pullback,' backing up his Buy rating on Amazon stock, while boosting his price target from $255 to $265, implying a superb upside of 23% from current levels. So what triggered the drop? According to Anmuth, the culprit was AWS. While AWS revenue jumped 17.5% year-over-year to $30.9 billion, it underwhelmed investors who expected more, especially considering the backdrop of AI-fueled cloud expansion. That's not all. Amazon also reported a record $31.4 billion in capex, which only made matters worse in compounding the pressure on AWS to deliver even bigger growth numbers. Still, the Street isn't backing off. Analysts at Citi also bumped their price target on the stock to $270, noting Amazon's higher spending reflects healthy demand and efforts to fix infrastructure constraints in the cloud. However, it's important to consider that growth lagged peers, and management didn't exactly calm concerns around the AI opportunity. Despite that, the Wall Street punditry believes the selloff doesn't match the broader story. And for JPMorgan, this is the kind of dip worth loading up on. AWS: Amazon's profit engine and AI powerhouse AWS is far from purely a segment; it's arguably the profit core and strategic anchor for the entire business. It's responsible for close to 60% of Amazon's operating income, with AWS running at an annualized sales pace above $123 billion. That scale gives it the profile of a standalone cloud giant, one that underpins the bulk of Amazon's enterprise Andy Jassy has reiterated AWS's incredible competitive moat, noting it's still 'meaningfully larger' than its next-closest rival. Recent data supports that lead. Per the most recent reports, AWS commands roughly 31% to 32% of the global cloud infrastructure market, followed closely by Microsoft Azure with roughly 22.5% to 24%, and Google Cloud at 10% to 12%. Other estimates tend to vary based on methodology, but generally confirm AWS's position at the top, with competitors trailing by a hefty margin. AI is rapidly deepening that role. AWS is investing a ton of money in generative and agentic AI, in serving external clients through the Generative AI Innovation Center. Another key differentiator for AWS is that it effectively originates from Amazon's internal infrastructure needs before commercialization. It comes with embedded efficiency and noteworthy cash-flow sustainability, making it more than a cost center, powering internal tools like Amazon Personalize. That synergy creates a robust loop where AI sharpens retail engagement and fuels more demand for compute. More News: Amazon's quiet pricing twist on tariffs stuns shoppersBank of America flags 3 breakout stocks to watch ahead of earnings Margins may have compressed recently on the back of AWS building its custom infrastructure, including Trainium chips, but those bets are about long-term dominance. JPMorgan drops 3-word verdict on Amazon stock post-earnings first appeared on TheStreet on Aug 4, 2025 This story was originally reported by TheStreet on Aug 4, 2025, where it first appeared.
Yahoo
30-07-2025
- Business
- Yahoo
Reddit set to report Q2 earnings as Wall Street scrutinizes daily active user growth
Reddit (RDDT) is set to report second quarter earnings after the bell Thursday as Wall Street scrutinizes how changes to Google Search's algorithm could affect the social media platform's daily active users, which fell below expectations in the US in the past two quarters. Wall Street analysts tracked by Bloomberg expect Reddit to report earnings per share of $0.72, up from last year's loss per share of $0.06. They project the company's second quarter revenue to hit $425 million, up 50% from the prior year, according to Bloomberg data. Analysts expect global daily active users to climb 20% from the prior year to roughly 110 million for the period and US users to rise more than 9% to 50.5 million. Reddit shares sank following its quarterly reports in February and May despite earnings and revenue beating Wall Street's expectations, as changes to Google (GOOG) Search's algorithm created volatility in traffic to the site. Google accounts for 40% to 50% of Reddit's traffic, according to JPMorgan analyst Doug Anmuth, who holds a Neutral rating on the stock. Investors are concerned that Reddit's global daily active user growth is slowing. Daily active users (DAUs) increased 47% in the third quarter of 2024, 39% in the fourth quarter, and 31% in the first quarter of 2025. Following Reddit's first quarter results on May 1, CEO Steve Huffman spoke about the issue, saying that "given that the search ecosystem is under heavy construction, the near term could be more bumpy than usual." "[W]e expect the market to focus on the DAU trajectory, even if RDDT delivers another material beat on Revenue/EBITDA," Jefferies analyst John Colantuoni wrote in a note to investors Monday, maintaining his Buy rating on Reddit stock. Reddit shares have partly recovered losses earlier in the year, climbing roughly 70% from the stock's low of about $87 in early April. The stock spiked in June after the company launched new AI ad tools for marketers at the Cannes Lions Festival. Still, Reddit trades far below the highs above $220 seen in February before its fourth quarter earnings report, and shares are down nearly 10% in 2025. Analysts at Needham, Deutsche Bank, Jefferies, and Raymond James reiterated their Buy ratings on the stock in notes to clients in the days leading up to Reddit's report, as concerns over volatility in its traffic waned. "The bear case (that Google Search will no longer send traffic to RDDT) is not playing out," Needham analyst Laura Martin wrote. She added: "AI-driven ad tools ... suggest RDDT is already monetizing GenAI." Meanwhile, Jefferies' Colantuoni, citing web traffic data, said in a note that daily active user growth stabilized in the past three months after decelerating throughout the first quarter. Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @ Email her at Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
29-07-2025
- Business
- Yahoo
Why Spotify's Latest Results Look Worse Than They Are
Spotify Technology (NYSE:SPOT) saw its stock drop sharply on Tuesday after it released its second-quarter 2025 results. Despite strong user growth, the company missed earnings and revenue expectations and issued a cautious forecast, which shook investor confidence. Wall Street analysts rerated the stock after the quarterly results. JP Morgan analyst Doug Anmuth reiterated an Overweight rating on Spotify, suggesting continued confidence in the company's long-term prospects despite the near-term headwinds. Similarly, Goldman Sachs analyst Eric Sheridan maintained a Buy rating, underscoring his positive outlook with a reaffirmed price forecast of $ these endorsements from analysts indicate underlying belief in Spotify's business model, the immediate market reaction highlights the Street's sensitivity to financial performance deviations. JP Morgan's Perspective Anmuth noted Spotify is executing well on its medium-term financial targets of achieving 30-40% gross margins and 10%+ operating margin. The analyst credited product optimizations and effective marketing for driving solid growth in both users and premium subscribers, while Spotify continues to invest in its core offerings, including audiobooks, video podcasts, and music. However, second-quarter results and third-quarter guidance were mixed, he noted. Spotify delivered stronger-than-expected MAUs and premium subscriber growth, but foreign exchange (FX) headwinds and social charges weighed on revenue, gross margin, and operating income, Anmuth said. The analyst said the company posted a second-quarter gross margin of 31.5%, which was in line with both guidance and consensus. But he noted that its third-quarter gross margin forecast of 31.1% came in slightly below JPMorgan's 31.3% estimate, factoring in a ~40bps regulatory charge. Spotify guided for third-quarter FX-neutral revenue growth of 10%, signaling a ~500bps deceleration, though that figure may not reflect potential price increases, Anmuth noted. Notably, Spotify doubled its share buyback authorization to $2 billion. He will watch to see whether this marks a shift toward more consistent capital returns or remains opportunistic. In the second quarter, Spotify generated 700 million euros in free cash flow, beating JPMorgan's 641 million euros estimate, and delivered operating income of 406 million euros. This included 116 million euros in social charges but still fell short of management's 539 million euros forecast. JPMorgan and consensus estimates stood at 457 million euros and 490 million euros, respectively. On the user side, Spotify added 18 million MAUs in the second quarter, bringing the total to 696 million, above the 689 million guidance. Strong marketing campaigns and favorable competitive dynamics supported this growth across all regions. Premium subscribers rose to 276 million, 8 million net additions, beating the company's guidance of 273 million. Revenue for the quarter came in at 4.19 billion euros, up 15% FX-neutral year-over-year, but below both management's guidance of 4.3 billion euros and JPMorgan's 4.27 billion euros estimate. FX headwinds were much stronger than expected, around 440bps compared to the 170bps the company had projected. Premium revenue grew 16% FX-neutral, driven by a 12% increase in subscribers and a 3% rise in ARPU. Advertising revenue increased 5% FX-neutral, slightly below the 6% JPMorgan had expected. Spotify guided for third-quarter MAUs of 710 million and premium subscribers of 281 million, ahead of JPMorgan and consensus estimates. However, revenue guidance of 4.2 billion euros fell short of the 4.5 billion euros estimate, again reflecting significant FX pressure (~490bps) and indicating another ~500bps slowdown in FX-neutral revenue growth. Spotify expects a third-quarter gross margin of 31.1% and operating income of 485 million euros, below JPMorgan's forecasts of 31.3% and 524 million euros, respectively. The outlook embeds another 25 million euros of headwind from social charges. Overall, while user growth remains a strength, Anmuth closely watched for improvements in revenue momentum, cost structure, and long-term margin execution. Goldman Sachs' Take Sheridan expects a mixed to slightly negative market reaction to Spotify's second-quarter 2025 results. The analyst noted that the company reported revenue and operating profit below its prior guidance, while gross margin landed in line with expectations. He attributed the shortfall to an unfavorable revenue mix, higher-than-expected FX headwinds, and elevated social charges, driven in part by stock price appreciation. Despite these headwinds, Spotify continued to show strong user growth, signaling that external factors had more impact than weak business fundamentals, Sheridan noted. The analyst noted that this quarter's results reflect a continuation of Spotify's 2025 strategy, prioritizing long-term growth investments over margin expansion after a strong margin performance in 2024. He also highlighted Spotify's newly authorized $1 billion share buyback, on top of the remaining $896 million from a previous program. On the earnings call, Sheridan will watch for clarity on pricing strategy, gross margin outlook, and Spotify's ability to balance growth investments with operating efficiency. Price Action: SPOT stock is trading lower by 11.6% to $619.96 at last check Tuesday. Photo via Shutterstock Latest Ratings for SPOT Date Firm Action From To Mar 2022 Deutsche Bank Initiates Coverage On Hold Feb 2022 B of A Securities Maintains Buy Feb 2022 Wells Fargo Maintains Underweight View More Analyst Ratings for SPOT View the Latest Analyst Ratings Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? This article Why Spotify's Latest Results Look Worse Than They Are originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
28-07-2025
- Business
- Yahoo
Alphabet's Legal Woes May Create Buying Opportunity: Analyst
Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) is navigating a pivotal period marked by accelerating business fundamentals, robust advertising performance, and strong leadership in AI and cloud computing, even as a critical antitrust ruling looms. The upcoming decision from Judge Amit Mehta in the U.S. Department of Justice's search antitrust case, expected by August 8, 2025, could reshape the company's operational landscape, though the long-term implications are viewed as manageable. Despite the shadow of regulatory uncertainty, Alphabet's core growth engines and aggressive AI initiatives signal sustained strength, as underscored by J.P. Morgan analyst Doug Monday, Anmuth reiterated an Overweight rating on Alphabet with a price forecast of $232, citing accelerating fundamentals, resilient advertising performance, and the company's long-term leadership in both artificial intelligence and cloud computing. Anmuth supported the rerating by the company's accelerating fundamentals, resilient advertising performance, and long-term leadership in artificial intelligence and cloud computing. While regulatory uncertainty continues to dominate investor sentiment, particularly surrounding the U.S. Department of Justice's ongoing antitrust case over Alphabet's search business, the analyst believes the risks are manageable and potentially over-discounted in the stock's valuation. He noted that investor attention is now centered on Judge Amit Mehta's upcoming decision on remedies in the search antitrust case, which is expected no later than August 8, 2025. While the exact nature of the remedy remains unclear, Anmuth believes the most likely outcome would involve a prohibition on exclusionary practices and exclusive preloading of Google Search across major access points such as Apple (NASDAQ:AAPL) devices, Android smartphones, third-party browsers, and Chrome in the United States. More punitive measures, such as banning all distribution payments, forcing a Chrome divestiture, restricting AI programs, or enforcing extended remedy durations, are considered less probable but remain on the table, per the analyst. Regardless of the outcome, Alphabet is expected to appeal both the August 2024 monopoly ruling and any associated remedies, potentially extending the regulatory process by 1.5 to 2.5 years based on historical precedent, such as the Microsoft (NASDAQ:MSFT) case, he noted. From a financial perspective, Anmuth projects that Alphabet could face a 5% to 10% headwind to GAAP EPS in 2026 if stricter remedies are enforced. The most exposed segments include U.S. Search & Other revenue, which the analyst estimates will reach $86 billion in 2026, accounting for roughly 78% of Alphabet's U.S. S&O segment, 35% of global S&O revenue, and 19% of total company revenue. He noted that related U.S. traffic acquisition costs (TAC) are expected to total $20 billion, or 18% of domestic S&O (Sales & Operations) revenue. Despite these risks, Anmuth considers Alphabet's second quarter a defining moment for the stock. He noted that Google Cloud revenue grew 32% year-over-year, significantly accelerating, while Search & Other revenue rose 11% excluding foreign exchange impacts. Excluding legal fees and one-time settlement costs, the company's operating margin expanded by approximately 150 basis points year-over-year, reflecting continued efficiency even amid a surge in AI-related capital expenditures, as per the analyst. Valuation remains a strong point, Anmuth noted. Alphabet shares are trading at roughly 18.3 times 2026 GAAP EPS and 16.3 times 2027 EPS, which the analyst sees as attractive given the company's growth prospects. For 2027, the analyst projects GAAP EPS of $11.89, which supports the firm's $232 price forecast based on a 19.5x multiple. Alphabet is ranked as the analyst's second-highest conviction pick behind (NASDAQ:AMZN), driven by several key tailwinds: sustained leadership in AI and generative search transition, healthy growth in core ad businesses such as Search and YouTube, accelerating demand and capacity expansion in Google Cloud, and improving margin performance despite increased capex and depreciation, he said. Ultimately, while the legal overhang introduces short-term uncertainty, Anmuth argues that Alphabet remains one of the strongest long-term opportunities in large-cap tech. Any remedy-driven weakness in the stock could offer investors a compelling entry point, especially if the final ruling proves less punitive than feared, as per the analyst. Price Action: GOOGL stock is down 0.74% at $191.71 at last check on Monday. Image via Shutterstock Latest Ratings for GOOGL Date Firm Action From To Feb 2022 MKM Partners Maintains Buy Feb 2022 Mizuho Maintains Buy Feb 2022 Piper Sandler Maintains Overweight View More Analyst Ratings for GOOGL View the Latest Analyst Ratings Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? ALPHABET (GOOGL): Free Stock Analysis Report This article Alphabet's Legal Woes May Create Buying Opportunity: Analyst originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
