• by Sarah Mahoney  @mahoney_sarah, November 1, 2024

Amazon’s third-quarter financial results defied expectations, with solid performances in major segments. Net sales grew 11% to $158.9 billion, compared with $143.1 billion in the year-ago quarter.

That includes a 19% increase in advertising sales to $14.3 billion, ahead of predictions. And while some observers had been nervous about slowing growth in AWS, Amazon’s computing division, revenues there climbed 19% year-over-year to $27.5 billion, with profit margins outperforming forecasts. Sales in North America rose 9% to $95.5 billion.

Net income soared 55% to $15.3 billion compared with $9.9 billion.

Besides exceeding estimates, the company took a bullish tone about the coming quarter and anticipates that fourth-quarter sales will rise between 7% and 11%, reaching $181.5 billion and $188.5 billion. The company anticipates operating income to land in the $16 billion to $20 billion range.

As is typical, Amazon used the earnings announcement to hype recent innovations, including its first-ever fuel savings offer for Prime and expansion of Amazon Pharmacy Same-Day Delivery to nearly half the U.S.

The company also highlighted new AI tools, including shopping guides and an AI assistant for sellers. For advertisers, it is offering expanded AI video generation and live-image capabilities.

In programming, Amazon called attention to the second season of "The Lord of the Rings: The Rings of Power," ranking as Prime Video’s most watched returning season ever, and a new record in the company’s NFL partnership, a Cowboys-Giants "Thursday Night Football" becoming the most-streamed NFL regular season game, and its upcoming election coverage with Brian Williams.

The results disprove doubters' "claims that ecommerce margins are plateauing,” writes Jason Helfstein, who follows the company for Oppenheimer. And with advertising sales 2% higher than his estimate, he notes “management expectations for considerable upside" in the thriving ad sales segment.

Scott Devitt, an analyst who tracks Amazon for Wedbush, also sees outsized strength in Amazon’s retail ad network. “We expect the advertising segment to maintain high-teens growth through 2025,” he writes in his note, “benefiting from a rising contribution of more recent initiatives, including Prime Video ads.”