Few companies are as closely associated with their founder as Amazon (AMZN +15.32%) is with Jeff Bezos.
Bezos left a lasting imprint on the company, focusing on long-term thinking, customer satisfaction, and a "Day One" mentality. He stepped down as CEO in 2021 when the stock was around an all-time high during the pandemic, leaving Andy Jassy, the head of Amazon Web Services, to take the reins.
While the company has continued to grow since then and delivered solid results, the stock has slumped, underperforming the S&P 500 as the chart below shows.
AMZN Total Return Level data by YCharts
The stock fell sharply during the 2022 bear market and has struggled to regain ground since then, as its valuation has compressed and its growth rate has moderated.
However, Amazon just turned in its biggest gain in more than a decade, as the stock jumped 15.3% on Friday on the back of a breakout earnings report that included its fastest revenue growth in five years.
Revenue jumped 20% to $167.7 billion, but the biggest highlight may have been Amazon Web Services, the company's cloud computing business, which reported revenue up 37% to $42.2 billion, its fastest rate in 18 quarters. That helped reassure investors who may have been nervous about the company's plans to spend $220 billion in capital expenditures this year.
Bottom-line results were also strong, with operating income up 43% to $27.5 billion.
Image source: Amazon.
One reason for investors to pause
Amazon's Prime Day shifted from July to June this year, temporarily inflating revenue and adding approximately 500 basis points to its total growth.
In other words, the 20% growth rate is likely not sustainable, and the company guided to revenue growth of just 9%-12% in the third quarter.
However, the shift in Prime Day wouldn't affect AWS, which is now the primary source of its operating profit.
NASDAQ: AMZN
Key Data Points
Is Amazon a buy?
Amazon does seem to be hitting an inflection point in some ways. It exceeded a $25 billion annual revenue run rate in both AWS's AI and chips businesses, and both grew in the triple digits year-over-year.
Additionally, the company's investments in grocery and faster delivery also seem to be paying off.
After a 15% pop and a boom in its cloud business, things are suddenly looking different for Amazon. The stock looks like a good long-term buy as it could finally narrow the gap with the S&P 500.
