--- title: "Should Investors Buy the Dip in Amazon Stock After Shares Slide on Revenue Miss?" description: "Amazon's stock has slid after missing revenue estimates in its Q2 results. The global market sell-off and a small interest rate hike in Japan have contributed to the stock's decline. Despite this, the" type: "news" locale: "en" url: "https://longbridge.com/en/news/211266909.md" published_at: "2024-08-10T14:34:37.000Z" --- # Should Investors Buy the Dip in Amazon Stock After Shares Slide on Revenue Miss? > Amazon's stock has slid after missing revenue estimates in its Q2 results. The global market sell-off and a small interest rate hike in Japan have contributed to the stock's decline. Despite this, there are opportunities for growth in AI and advertising. However, Amazon's valuation is considered high, and its gross margins are lower than those of software companies. Investors may consider taking a small position in Amazon while keeping an eye on its valuation. August may have just begun, but it has already been a tough month for **Amazon** (AMZN 0.69%) shareholders. The stock initially sank after the e-commerce giant missed analyst revenue estimates when it reported its Q2 results. Meanwhile, the stock has continued to drift lower, caught in the global market sell-off. A small interest rate hike in Japan and the unwinding of the carry trade appears to be one reason behind the market's recent weakness. Let's take a closer look at Amazon's most recent results to see if the sell-off is a good opportunity to buy the stock. ## Second-quarter results and guidance fail to impress When it comes to earnings, how a stock reacts is often linked to the expectations going into the results. If a company falls short of analyst estimates for a key metric or issues guidance below analyst expectations, the stock will often feel some near-term pressure. While Amazon posted solid 10% revenue growth in its second quarter, its $148 billion in sales fell short of analyst expectations for revenue of $148.6 billion. Meanwhile, it forecast that its third-quarter sales would grow by 8% to 11% to between $154 billion and $158.5 billion. However, the $156.4 million midpoint of that range was shy of the $158.2 million analyst consensus. The company's cloud computing segment, AWS, led the way with revenue growth of 19% to $26.3 billion. AWS' operating income, meanwhile, soared 72% from $5.4 billion to $9.3 billion. North American sales climbed 10% to $90 billion, while international sales rose 7% to $31.7 billion. Advertising services led the way with 20% revenue growth to $12.8 billion. The company is upbeat about the prospects of incorporating advertising into its Prime Video service and it just inked an 11-year deal with the NBA to broadcast live games. Subscription service revenue, meanwhile, grew 11% to $10.9 billion. Third-party seller services revenue jumped 13% to $36.2 billion. Online stores only saw 6% sales growth to $55.4 billion, while physical stores saw sales grow 4% to $5.2 billion. Like its cloud computing competitors, Amazon plans to spend heavily to continue to build out the infrastructure needed to support increasing demand for artificial intelligence (AI) as well as non-AI workloads. As a result, its second-half capital expenditures (capex) will be higher than in the first half. Amazon also continues to promote its new AI chips, Trainium for training and Inferentia for inference, which will have next-generation versions coming out later this year. According to management, there is a lot of demand for the chips given their price performance. ## Is it time to take a dip into Amazon? Amazon has a number of strong opportunities in front of it. First and foremost is AI, and the company is attacking this opportunity on several levels from cloud computing, to its own AI chips, to offering large language model (LLM) services. Advertising is another big opportunity, and this area showed strong growth in the second quarter. Sponsored product ads are currently Amazon's biggest source of ad revenue, but it will begin bringing more advertising to its Prime Video service as well. Meanwhile, its deal with the NBA will undoubtedly bring in a lot of interest and ad dollars to its streaming service. One knock against Amazon is its valuation. The stock currently trades at a forward price-to-earnings (P/E) ratio of nearly 28 based on 2025 analyst estimates. While that is down from historical P/E levels, revenue growth at the company has slowed down over the years. AMZN PE Ratio (Forward 1y) data by YCharts Given its revenue growth and gross margin profile, I would consider Amazon's current valuation a bit on the high side. Amazon's gross margins are much lower than that of a software company. For example, **Microsoft** has gross margins near 70%, while Amazon's are under 50%, and around 31% when including fulfillment costs. With the recent overall market weakness, I'd most likely take a small starter position in Amazon given the opportunities in front of it, while looking to add more if it continues to sell off and its valuation becomes more attractive. ### Related Stocks - [AMZN.US - Amazon](https://longbridge.com/en/quote/AMZN.US.md) ## Related News & Research | Title | Description | URL | |-------|-------------|-----| | 机构 “最超配” 闪迪，“最低配” 英伟达 | 据摩根士丹利最新的统计：“机构对美国大型科技股的低配程度是 17 年来最大的” 相比 2025 年 Q4 的标普 500 指数权重，“$NVDA 仍然是机构低配程度最大的大型科技股，其次是苹果、微软、亚马逊和博通，而存储巨头闪迪则是 “最超 | [Link](https://longbridge.com/en/news/276289765.md) | | 沃尔玛四季度财报超预期但盈利指引不及预期，CEO 称 “美国低收入家庭只能勉强维持生计” | 沃尔玛 Q4 营收超预期，新财年盈利指引（每股 2.75-2.85 美元）远低于市场预期的 2.96 美元，显示通胀压力下消费者支出不确定性犹存，拖累股价下跌 1.38%。财报印证 K 型” 分化：高收入家庭驱动增长，低收入群体 “钱包吃紧 | [Link](https://longbridge.com/en/news/276398633.md) | | 特朗普暗示违法征收的关税不退了，美财长称今年关税收入将 “基本保持不变” | 美国总统特朗普暗示不会退还被最高法院裁定违法的关税，预计 2026 年关税收入将保持不变。特朗普计划签署行政令，对全球商品加征 10% 进口关税，取代被推翻的关税。财长贝森特表示，政府将利用替代法律权力维持关税收入，强调国家安全和财政收入不 | [Link](https://longbridge.com/en/news/276494362.md) | | 美财政部让步，拟修订主权财富基金税收提案，此前遭私募业警告 | 美国财政部正就一项针对主权财富基金和公共养老基金征税方式进行全面改革的提案作出让步。相关提案此前由美国国税局提出，拟更新税法第 892 条，将这些基金持有的多数美国债务投资归为商业活动，这将令其面临被征税的风险。此前，私募信贷和私募股权公司 | [Link](https://longbridge.com/en/news/276491732.md) | | 为 AI 交易 “背书”！OpenAI 正敲定新一轮融资：以 8300 亿美元估值募资高达 1000 亿美元 | OpenAI 正以 8300 亿美元估值推进新一轮融资，目标筹集 1000 亿美元。软银拟领投 300 亿美元，亚马逊和英伟达可能各投 500 亿及 300 亿美元，微软拟投数十亿美元。本轮融资是 OpenAI 自去年秋季公司制改革以来的首 | [Link](https://longbridge.com/en/news/276298180.md) | --- > **Disclaimer**: This article is for reference only and does not constitute any investment advice.