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Why Amazon Stock Jumped Today

By Joe Tenebruso – Jul 31, 2020 at 4:54PM

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The e-commerce juggernaut is growing at a torrid clip during the coronavirus pandemic.

What happened

Shares of (AMZN -2.33%) rose 3.7% on Friday, following the online retail titan's blockbuster second-quarter results. 

So what

Amazon's sales surged a staggering 40% to $88.9 billion. That was well above analysts' estimates of $81.6 billion. The online retail giant has served as a lifeline for millions of people during the COVID-19 crisis, at a time when many physical retail stores have been forced to close.

Amazon's cloud computing division, Amazon Web Services (AWS), is also experiencing higher demand as more companies turn to cloud-based services to enable their employees to work from home. AWS revenue climbed 29% to $10.8 billion.

A digital chart is rising in a stair-step manner.

Amazon is growing sales and profits at incredible rates. Image source: Getty Images.

Despite heavy coronavirus-related costs -- such as purchases of safety gear, increased cleaning regimens, and bonuses for employees -- Amazon's profits also bested Wall Street's expectations. Its operating income soared 89% to $5.8 billion, while its earnings per share nearly doubled to $10.30. Analysts' forecasts had called for EPS of only $1.46. 

Now what

Retail sales were already shifting online before the pandemic. COVID-19 has only served to accelerate this global trend.

Perhaps more than any other business, Amazon (and its shareholders) stands to profit handsomely from the growth of e-commerce in the months and years ahead.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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