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CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.
CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

Amazon share price rallies on improved Q2 results

The company's focus on cost-cutting and investment in growth areas like AWS and advertising suggest a promising outlook for future profitability.

Source: Bloomberg

Key Takeaways:

  1. Amazon's second-quarter earnings exceeded analysts' expectations.
  2. CEO Andy Jassy’s cost-cutting initiatives have helped result in Amazon's most significant earnings beat since Q4 2020.
  3. Amazon's forecast for the third quarter indicates a growth range of 9% to 13%
  4. Amazon Web Services (AWS) played a crucial role in the company's performance.
  5. Advertising continues to be a powerful revenue source for Amazon, with quarterly revenue increasing by 22%

Amazon Inc. (AMZN) recently released its second-quarter earnings, significantly exceeding analysts' expectations. The company's stock rose over 10% in after-hours trading, reflecting investor confidence in the e-commerce giant.

The total revenue stood at $134.4 billion where $131.5 billion was expected. The company reported earnings per share (EPS) of 65 cents, nearly double the 35 cents forecast by analysts surveyed by Refinitiv. This performance marks Amazon's most significant earnings beat since the fourth quarter of 2020, indicating that CEO Andy Jassy's cost-cutting initiatives are starting to pay off.

Amazon has been implementing significant layoffs, with a record 27,000 jobs terminated since last fall. The company also froze corporate hiring, and Jassy has been focusing on reducing expenses across all units. As a result, the global headcount decreased by 4% year over year, standing at 1.46 million people at the end of the second quarter.

Looking forward, Amazon anticipates third-quarter sales to range between $138 billion to $143 billion, reflecting a growth of 9% to 13%. This forecast aligns with the success of Amazon's 48-hour Prime Day discount event held in July, which the company heralded as its most successful ever.

Amazon Web Services (AWS) played a significant role in the company's performance, generating $22.1 billion in revenue. AWS accounted for 70% of Amazon's $7.7 billion operating profit. Despite this, AWS's growth rate has slowed compared to previous quarters, marking the slowest expansion since 2015.

Advertising continues to be a powerful revenue source for Amazon, with quarterly revenue increasing 22% to $10.7 billion.

Amazon reported a net income $6.7 billion (65c per share). This contrasts with a loss of $2 billion in the prior year following a markdown on the company's investment in the electric vehicle company, Rivian.

Overall, Amazon's impressive second-quarter performance demonstrates the company's resilience and adaptability in challenging market conditions. The company's focus on cost-cutting and investment in growth areas like AWS and advertising suggest a promising outlook for future profitability.

Amazon – trading view

Source: IG

The share price of Amazon has broken out of a short-term range (highlighted grey) following news of the group’s Q2 results. The upside breakout suggests a continuation of the longer-term uptrend with 145.90 the next upside resistance target considered.

Traders not already long into the breakout might hope for a pullback towards the 134.50 support level for long entry, using a close below the midpoint of the 123.50 to 134.50 range as a possible stop loss indication.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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