Amazon's Q3 2018 earnings

Amazon's Q3 2018 earnings

Amazon has revealed its third quarter 2018 financial results, announcing $56.6 billion in net sales, a huge 29-percent increase versus Q3 2017.

To be sure, Amazon shares (AMZN.O) dropped by the most in four years on Friday after its outlook for holiday season sales missed targets, fanning concerns that Wall Street's tech darlings are finally starting to face stronger competition, Reuters reported.

The company posted third-quarter earnings per share of $5.75 on net income of $2.9 billion, topping expected earnings per share of $3.14, according to Refinitiv data. With some more distance from the Whole Foods acquisition, employee growth numbers will slow from the big jumps in recent quarters but line up better with what's actually happening at the company. Since the end of September, analysts have cut their 2019 revenue estimates by 1%.

While US economic growth kept apace despite trade wars, the same can not be said of USA corporate profit growth, as a slew of disappointing forecasts this earnings season showed how tariffs, rising wages and borrowing costs as well as jitters over geopolitical events are hurting companies. Its revenue in the third quarter fell short of expectations, and it forecast that its holiday sales would similarly be less than analysts had forecast.

Alphabet's cost of revenue was $14.3 billion in the third quarter, up 28 percent from a year ago.

Q4 earnings per share (forecast): Between $66.5 billion and $72.5 billion.

Operating cash flow increased 57 percent to $26.6 billion.

Investors' focus will be on the company's performance in its Web Services business, which is expected to be a major boost to the company's profitability. This is pretty impressive considering Amazon's primary North American retail segment pulled in over $34 billion in sales yet AWS booked just shy of $6.7 billion!

On the brighter side was data that showed gross domestic product increased at a 3.5 percent annualized rate in the third quarter as a tariff-related drop in soybean exports was partly offset by the strongest consumer spending in almost four years and a surge in inventory investment.

Amazon also introduced the all-new Fire HD 8 tablet, featuring an 8-inch HD display, a quad-core processor, 16 GB of internal storage with support for up to 400 GB more via microSD, up to 10 hours of mixed use battery life, and hands-free access to Alexa. The majority of stocks within the S&P 500 are already either in correction or in bear territory, with the latter representing a decline of more than 20 percent. Operating income was $2 billion.

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