$Amazon(AMZN.US) 3Q24 first take: Amazon's stock price surged nearly 6% after the earnings announcement, so what was good about this performance?

In simple terms, the market's focus before the earnings was mainly on two points: 1. Can AWS cloud business accelerate better than expected? This reflects signs of improvement in the competitive landscape under the current AI wave. 2. Can the company (especially the retail segment) continue the previously temporarily interrupted trend of profit margin improvement?

We can see that: 1) The vision of AWS accelerating beyond expectations has not been realized, with a year-on-year growth of 19.1% this quarter, only a slight acceleration of 0.4 percentage points compared to the previous quarter. According to Dolphin Investment Research, leading sell-side and buy-side firms expected a growth rate of 20% or higher. However, there were no signs of acceleration.

2) However, in terms of operating profit margin improvement, Amazon's performance this time was quite good. This quarter achieved an operating profit of $17.4 billion, significantly exceeding market expectations and the previous guidance upper limit by over $2 billion. The operating profit margin increased by 1.1 percentage points to 11% compared to the previous quarter, indicating that the trend of profit expansion continues.

Specifically, the North American retail segment, which the market mainly focuses on, was not the main source of the outperformance. The highlight was the international retail segment, which achieved an operating profit of $1.3 billion this quarter, exceeding expectations by 2x, reaching 23% of the North American segment's profit.

Additionally, the operating profit margin of the AWS segment also rose again to 38.1%, far exceeding the market expectation of 33.2%. Not only did it not show a narrowing of profit margins due to increased investment and extended depreciation periods, but it continued to rise. It is important to pay attention to how management explains the reasons for this increase.

Achieving either of the two points led to the post-earnings surge, but after leveling out the decline from the previous trading day, the increase is not considered high.