Amazon surprised analysts with its first-quarter results, outperforming expectations across the board at investment bank Jefferies. The company’s net sales and operating income exceeded consensus estimates, driven largely by the exceptional performance of Amazon Web Services (AWS).
Jefferies analysts highlighted the impressive growth of AWS, with net sales increasing by 17% and operating income surpassing expectations by 30%. This marked the second consecutive quarter of accelerating growth for AWS, with an operating margin of 37.6% – an all-time high for the service.
While Amazon’s guidance for the second quarter fell below consensus estimates, Jefferies remains optimistic about the company’s future prospects. They anticipate a substantial increase in capital expenditures to support AWS and AI initiatives, with Amazon achieving a multi-billion dollar AI run-rate in Q1.
Despite perceptions that Amazon is lagging behind in AI, analysts at Jefferies believe that the company is making significant strides in this area. The investment bank has set a price target of $225 per share for Amazon, reflecting a positive outlook on the stock’s performance.
On Wednesday, Amazon’s stock opened 2.6% higher at $180.1, indicating investor confidence in the company’s long-term growth potential. With a strong performance in Q1 and a focus on expanding its AI capabilities, Amazon is well-positioned to remain a key player in the competitive tech industry.
