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On Thursday, Amazon.com Inc. (NASDAQ:AMZN) surged 13.16% in after-hours trading after the company delivered third-quarter results that beat Wall Street expectations. Gene Munster Calls It ‘A Margin Expansion Story' Deepwater Asset Management managing partner Gene Munster called Amazon's earnings reaction a very positive one, underscoring that investors should focus on margin expansion. "Amazon is such a big company that any little changes to margin can have a meaningful impact on their earnings and … therefore on valuation," Munster said. He noted that automation and artificial intelligence are key contributors to Amazon's improved profitability. “This is a margin expansion story in part because of automation … but there is no denying it. This company has seen some impressive improvements in margins over the past five years.” "They talked about having a million robots now—undoubtedly that number is going to continue to increase," he added, describing the company's operational efficiency as a "pressure point" for future performance. Munster projected Amazon's operating margin for the December quarter to reach about 12.2%, up from 11.7% a year ago and significantly higher than roughly 4.5% in 2019. See Also: Intel Wraps Up Altera Stake Sale In Bid To Streamline Business Ad Business Quietly Becomes A Powerhouse Futurum Group CEO Daniel Newman also took to X, formerly Twitter, and highlighted another growth engine—Amazon's advertising segment. "$AMZN is also an ads juggernaut. $65 billion a year," Newman posted, noting that it trails behind the company's online store, third-party seller services and AWS in revenue. AWS Growth and Guidance Beat Street Expectations Amazon reported third-quarter net sales of $180.2 billion, up 13% year-over-year and ahead of analysts' estimates of $177.8 billion, according to Benzinga Pro. The company posted earnings per share of $1.95, surpassing expectations of $1.57. AWS sales revenue jumped 20% year-over-year to $33 billion. The company guided for fourth-quarter net sales between $206 billion and $213 billion, representing 10% to 13% year-over-year growth. Operating income is expected to range from $21 billion to $26 billion, up from $21.2 billion in the same period last year. Capital Spending To Power AI Ambitions Amazon said its cash capital expenditures totaled $34.2 billion in the third quarter, bringing its year-to-date spending to $89.9 billion. The company noted that most of the investment went toward expanding Amazon Web Services to meet growing demand for AI and core cloud services, as well as developing custom silicon such as Trainium. Amazon expects full-year cash capex to reach about $125 billion in 2025 and to increase further in 2026. Benzinga's Edge Stock Rankings place the e-commerce giant in the 92nd percentile for Growth, underscoring its strong performance among peers. Click here to see how it compares with its rivals. Read Next: Trump Turnberry Is ‘Our Monalisa’ Says Eric Trump As He Shrugs Off Millions In Losses— ‘We Don’t Give A…’ Photo: bluestork / Shutterstock
