A for Amazon, K for buy

All five FAANG stocks have now reported their results for this quarter – and for Evercore ISI’s Mark Mahaney, the worst is behind one of the tech giants. That’s Amazon, which posted an overall loss of $2 billion for the quarter ended June. The company was hit by a $3.9 billion loss from its Rivian holding.

“Amazon reported better-than-expected June quarter results and then issued guidance for the September quarter that was roughly in line with expectations,” Mahaney, director of internet research at Evercore ISI, told CNBC’s “Squawk Box Asia” on Friday. He stressed that given the risk of a global recession, Amazon is likely to lower its forecasts.

Investors were encouraged by Amazon’s upbeat outlook, which indicated consumer demand was still resilient and came despite the deteriorating outlook for US consumer confidence. This left Mahaney optimistic that the worst is over for Amazon, as he says the company is “doing really well.” He forecasts accelerated sales growth and margin expansion in the second half of the year despite inflationary headwinds.

“They’re bringing out really good product initiatives… They’ve expedited delivery and increased their inventory. I think that increased customer satisfaction and made Prime customers buy more,” he added, noting that the company outperformed other retailers this quarter.

Mahaney also pointed to the continued growth of cloud computing service Amazon Web Services and its advertising business. “These are higher-margin businesses that are growing faster than the core retail business, which will have a wonderful impact on margins. This revenue shift to higher-margin, faster-growing businesses is positive,” he said.

“I like Amazon and I think it can continue to recover. There are a lot of things that haven’t gone right yet. Markets have still not fully recovered and international business margins are still weak. I think these will improve over the next 12 months. Fundamentals will improve so there is still a lot of room for improvement for both the company and the stock,” he added.

DER AKTIONÄR also sees Amazon’s attractive valuation and remains bullish on the paper.

#Amazon #buy

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