Schwab Network on $AMZN (Nov 2, 2026)
AMZN's Q3 was mixed but overall pretty good: EPS $1.89 missed $1.96 and revenue just under $202B was a bit low; AWS grew 39.3% YoY, above expected but below the >40% figure discussed and the fastest in five years. Phillip Securities upgraded and lifted its target from $320 to $330. Capex is forecast near $220B for 2026; not raising costs was a relief and cloud is most profitable, but capex, AI revenue and advertising slowdowns remain concerns; the stock fell only 2% on a bad tech Friday.
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Amazon released their report last week. They are getting a pretty good response on Wall Street today. According to my last check, the share price has increased slightly in the pre-market.
Yes, Phillip Securities upgraded Amazon's rating and raised its target price on the stock from $320 to $330 after their third-quarter report.
Remember, the report they released last week wasn't too bad. Their EPS was $1.89 versus the expected $1.96. Revenue came in at just under $202 billion. That was a bit low, wasn't it?
But AWS achieved 39.3 percent growth over last year, right? This was higher than expected, but Diana, the secret estimate number we talked about was that it was above 40 percent growth for AWS, but this is the highest growth rate in the last 5 years for their cloud business.
They are still forecasting cash spending of about $220 billion for 2026. Maybe it scared investors a little that they didn't cut costs, but the relief is that they didn't increase costs.
Actually the margin wasn't bad, but they're continuing to build out their AI infrastructure plan, right? But at the same time, the cloud business is growing. This is the most profitable aspect of their business.
But when you look at the upgrade, it's not surprising, as the stock has rebounded from its pre-market lows after falling 2% after earnings last week. It had decreased by 6-7%. But all things considered, the results were pretty good.
You still have concerns about capital expenditure (CapEx) costs and revenue from AI. We've seen some slowdowns in some parts of their advertising business, but they've said they're in a good position when it comes to AI and are leveraging their full stack capabilities.
And don't forget that they have another side to their business, which is tronium chips. I think this issue is largely ignored. So, yes, we'll have to wait and see on this one, but even on a pretty bad day for tech on Friday, the stock price only fell 2%. So, that was maybe a positive aspect.
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