Amazon’s guidance for Q2 indicates that the worst is still not over. Notably, its net sales growth rate has consistently lost steam over the past four quarters. For instance, Amazon’s net sales growth decelerated to 7% in Q1 of 2022 from 9% in Q4 of 2021. Moreover, Amazon expects 3-7% growth in its top line in Q2, implying further softness.
While Amazon’s weak near-term outlook and uncertainty over the economic trajectory could limit the recovery in the stock, the momentum in its cloud business is a bright spot. During the last reported quarter, Amazon’s cloud business delivered net sales growth of 37%.
Its growth could reaccelerate as comparisons ease. Meanwhile, pressure on its margin will ease as it laps the higher cost environment in the second half of this year. Amazon will also likely benefit from solid capital investments in its cloud and consumer business. However, Rosenblatt Securities analyst Barton Crockett has a different view and remains sidelined on AMZN stock.