Amazon's Q2 2024: The Capex dilemma

Hi reader,

You might have forgotten with all the noise there’s currently in financial markets, Amazon reported its Q2 earnings last week. The company’s stock probably fell prey to the already widely spread notion that the investments in AI that Big Tech is undertaking will not produce adequate returns (discussed later in the article). This, together with what looks to be conservative guidance, is the only explanation I see behind the post-earnings drop the company suffered. The stock has even suffered more after this due to some macroeconomic fears and panics that seem to have gotten hold of the markets recently. The stock is now down around 20% in the last month:

So, this begs the question:

Was there something in Amazon’s earnings to justify such a drop?

As a spoiler, I’d say that I don’t think so, but let’s take a more detailed look at these.

The summary table and some comments

I typically share a summary table in this section with the main financial metrics, the KPIs, and the guidance. As you can see below thanks to the colour code, Amazon’s quarter was once again outstanding numerically speaking:

Some brief comments on these numbers…