AMZN

Amazon 2026 Capex Guidance Casts Shadow Over Stock

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Image Source: TradingView By Brian Nelson, CFA Amazon (AMZN) recently reported mixed fourth quarter results with revenue coming in better than expected, but GAAP earnings per share missing the mark. Net sales for the quarter increased 14%, to $213.4 billion, with AWS segment sales increasing 24% year-over-year, to $35.6 billion. Adjusted operating income in the fourth quarter came in at $27.4 billion compared with $21.2 billion in the fourth quarter of 2024. North America segment operating income was $11.5 billion, compared to $9.3 billion in the year-ago period, while AWS segment operating income was $12.5 billion, compared to $10.6 billion in last year’s quarter. Net income increased to $21.2 billion in the fourth quarter, or $1.95 per diluted share, compared … Read more

Amazon’s Cloud Business Continues to Propel Results

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Image Source: TradingView By Brian Nelson, CFA Amazon (AMZN) recently reported third quarter results that beat expectations for both revenue and adjusted earnings per share. Net sales increased 13%, to $180.2 billion, in the third quarter, which compares to $158.9 billion in the same quarter a year ago and was nearly $3 billion more than expected. Excluding foreign exchange impacts, net sales increased 12% compared to the third quarter of last year. North America segment sales increased 11%, international segment sales increased 14%, while AWS segment sales advanced 20% year-over-year, to $33 billion. Adjusted operating income came in at $21.7 billion versus $17.4 billion in the same period a year ago. Net income increased to $21.2 billion in the quarter, … Read more

Thinking Slow: 3 Research Blind Spots That Changed the Investment World

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Dear members: — Daniel Kahneman in his text Thinking, Fast and Slow (1) divided the human psyche into two systems. The first system is instinctive and emotional, often set on autopilot, while the second system is slower and more logical, requiring a calculating conscious. Many of the maxims the investment world takes for granted today suffer from conclusions that are made rapidly, almost without thinking, driven by our first system, creating what I call research blind spots. — In World War II, Allied bombing raids were suffering from very high casualty rates. It was estimated that for those pilots that were flying at the beginning of the war, only about 10% survived, a terrible loss rate. Bombing was crucial to the Allied … Read more

Amazon’s Third Quarter Operating Income Guidance Conservative

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Image Source: TradingView By Brian Nelson, CFA Amazon (AMZN) reported better than expected second quarter results on July 31 that came in ahead of the consensus forecasts on both the top and bottom lines. Net sales increased 12%, excluding foreign exchange impacts, as North America segment sales increased 11%, international segment sales increased 11% (excluding foreign exchange), while AWS segment sales increased 17.5%, to $30.9 billion, the latter modestly better than expected. On a reported basis, net sales totaled $167.7 billion, beating the consensus forecast by nearly $5.6 billion. Operating income increased to $19.2 billion in the second quarter compared to $14.7 billion in the second quarter of 2024, better than the company’s guidance range of $13-$17.5 billion and consensus … Read more

3 Undervalued Stocks to Consider Buying Now

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Dear readers:   With the markets retracing most of their recent drawdown, we’re taking a victory lap as we didn’t panic, nor should have you. We highlighted our wait-and-see approach amidst the worst of the pullback, and we expect the Magnificent 7 (large cap growth and big cap tech) to continue to propel the markets higher, as they have done.   We’ve been busy rolling valuation models as we finetune our assumptions for a great number of companies under coverage. While doing so, we came across three undervalued stocks that are also included in the simulated newsletter portfolios. We think they’re prime for highlight.   The three stocks are UnitedHealth Group (UNH), Nvidia (NVDA) and Alphabet (GOOG). We spend a lot of time on discounted cash-flow valuation, … Read more

Magnificent 7 Earnings Reports Not Bad Thus Far

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By Brian Nelson, CFA   Shortly after Trump’s Liberation Day, where the President unveiled lofty tariffs on numerous countries, we released our wait-and-see outlook for the equity markets, which thus far has proven to be the right move, with the markets largely recovering from the depths reached in April. The S&P 500 (SPY), for example, is down just 3.3% year-to-date, excluding dividends.   A lot has happened since Liberation Day, including easing of tariffs to a 10% baseline for most, if not all, countries, with the key exception of China, where tariffs remain extremely elevated and prohibitive. Many countries are now reportedly negotiating trade agreements with the White House, and we expect China to be added to that list soon, even if … Read more

Amazon Guides to Strong Second Quarter Revenue Growth

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Image: Amazon’s shares are trading near technical support levels. By Brian Nelson, CFA Amazon (AMZN) reported solid first quarter results May 1, with revenue and GAAP earnings per share coming in ahead of consensus expectations. Net sales jumped 9%, to $155.7 billion in the first quarter and advanced 10% after adjusting for currency movements. North America segment sales increased 8% year-over-year, International segment sales increased 5% (8% excluding currency movements), while AWS segment sales increased 17%, the latter a very healthy showing despite trailing the 33% growth rate that Microsoft (MSFT) put up in its quarter with respect to Azure. Amazon’s operating income increased 20.2%, to $18.4 billion in the first quarter, up from $15.3 billion in the same period … Read more

Trump Tariffs Higher than Expected; What We’re Doing

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By Brian Nelson, CFA The Trump tariff increases came in larger than what we were expecting, and it remains to be seen how they will flow through the global economy, as we monitor potential retaliatory tariffs from other countries. As it relates to the equity markets, we’re taking a wait and see approach at the moment as we monitor new policy changes related to trade, immigration, fiscal (tax), and regulations. In short, we’re not overreacting to the sell off as we won’t have a great handle on the tariff impact to companies for a few quarters when they report results post-tariff increases. That said, we’re expecting continued market volatility, with meaningful risk to the downside, before trade uncertainty alleviates in … Read more

Amazon Expects Elevated Capital Spending in 2025

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Image: Amazon’s stock has done quite well in recent months. By Brian Nelson, CFA Amazon (AMZN) reported better than expected fourth quarter results February 6 that showed a beat on both the top and bottom lines. Net sales advanced 10% in the quarter on a year-over-year basis and 11% excluding foreign exchange. North America sales increased 10%, International segment sales increased 8% (9% excluding changes in foreign exchange rates), while AWS sales increased 19%, to $28.8 billion, slightly lower than expectations. Operating income surged higher to $21.2 billion in the fourth quarter, up from $13.2 billion in the same period last year. Net income increased to $20 billion in the fourth quarter, equating to $1.86 per diluted share, up from … Read more

Target Expects Ho Hum Holiday Results

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Image Source: Target By Brian Nelson, CFA Target (TGT) recently reported third quarter 2024 results that missed on both the top and bottom lines, and the retailer issued ho-hum guidance for the holiday fourth quarter. Third quarter comparable sales advanced 0.3% in the third quarter (versus consensus expectations of 1.5%) as strong traffic and digital performance were offset by a comparable store sales decline of 1.9%. Guest traffic grew 2.4% in the quarter, however, while digital comparable sales increased 10.8% thanks to growth in same-day delivery and drive up. Beauty comparable sales grew more than 6% in the quarter, while Food & Beverage and Essentials categories grew low-single digits compared to the same period last year. Its gross margin rate … Read more