AMZN Earnings Breakdown: AWS Growth, Record Revenue & Options Trade

anywhere free on Schwab network.com. We're back on Morning Trade Live. Let's take a look at some of the mag seven members that have reported earnings this week. You know them meta, Microsoft Apple Amazon what two up two down. Hey it's pretty good. But at least today three up one down. But the one down big big move. Apple down almost. You know, let's call it 9.5%. We did the math earlier, something like, you know, 450 billion plus in market cap rates. So that one move doing a lot to erase some of the performance of these other other areas of the market. For example, you add up the performance of, of those names to the upside, pretty much equal to the S&P performance of Apple to the downside. But joining me here in studio to discuss Amazon which is the best contributor to the upside in the in the market today 40 points worth of upside. Amazon's contributing Mali. And you know like Microsoft, they seem to be able to tell a story that could justify some of this spending. They they certainly it seems that way. The street likes it. I mean, they asked for proof of monetization, especially if they wanted to spend more. They do want to spend more. And in this story, the Street is not upset about it. We are seeing a really positive reaction up more than 15% following this earnings report. So let's walk through the numbers. Then we'll walk through some of the sell side reaction. Amazon had surging cloud growth in the second quarter. That was a big driver here pointing to strong AI demand. Their EPS came in at $5.75 a share. That far exceeded the $1.82 that was expected. Revenue came in at more than $200 billion. The expectation was for $196.5 billion. As far as AWS Amazon's revenue exceeded their as well 42.2 billion better than the 40.5 expected advertising coming in just under $20 billion. The Street was looking for about 19.43 billion. Amazon did up its CapEx spend. They're projected to hit $220 billion this year from a previous 200 projection. They plan to spend more on AI. This of course being suggested by CEO Andy Jassy is because of memory prices pushing that higher. He said their spending spree isn't going to abate anytime soon. And Andy Jassy saying, quote, even at that amount, we will still have not enough capacity to meet all the demand that we have in 2026. And I believe this dynamic will also be true in 2027, too. In fact, we already have 2028 demand that is striking. So they're giving some visibility down the road. We're hearing a similar story of we've got so much need that we might not be able to meet here. The street pretty impressed with these results, obviously with the 15% move. As for the sell side, J.P. Morgan raising their price target to 3.65 from 3.30. Right now we're at 2.71 for some perspective. Keeps an overweight rating. Really. I likes the acceleration they saw in AWS. TD Cowan raising their target to 350 up from 340 keeping a buy rating pivotal raising their target to 3.33 from 320. Keeping a buy rating. Barclays raising their target to 365 from 330, keeping an overweight rating, Citi raising theirs to 350 from 325. Baird raising theirs to 310 from 300. That's one of the lower ones. And Cantor Fitzgerald, interestingly enough, lowering their price target to 320 from 330 but maintaining an overweight rating. That was the only price target reduction that I could find. Alex. But overwhelmingly, the response to these numbers is positive. It's like you mentioned on the Big Mac seven days. It was a tale of two stocks. Each time we had one move considerably higher and one moving considerably lower. Yeah, it's always nice when you can say, hey, our growth rate is getting bigger and our margins are also growing and expanding. So nice story for Amazon thanks to Marley. Make sure you stick around for trading. 360 coming up next. Joining us now though, Dan Deming managing partner at K-m financial to help us with an example, trade Amazon 35 plus dollars to the upside here. Dan how are you looking at this one. Well Alex I mean it's getting up to a critical point here as we did see that closing high just shy of 275 in May. And so I'm looking at a trade example today to capture a breakout but also provide a little bit of a buffer zone. Should we see a little hesitation over the next month and a half where you can get put in the stock at a better level. So today's trade example is buying the September 2nd 75 300 call spread and then selling the September 2nd 55 put to finance a big chunk of that. Now. 268 you can do it for even money. We're at 271 now, so it probably cost a little bit, but the idea here is to capture a breakout above 275, those closing highs from May. And if we do see a little bit of resistance here and it drifts back lower, to me, it looks like it's got support around that 255 to 250 level. And this allows you to get put in the stock around that 255 level. So therefore you get about a 5% break before you get long the stock if you were just to buy it outright. So that's the idea in this trade example. Alex. Appreciate it. Hey Dan, real quick before I let you go, you've been around this business for, for a while. You remember any time like what's going on right now? Just the volatility under the surface. No, no. I mean, I talked to a lot of people, Alex, and certainly a lot of people who have observed this market over a long period of time, this dispersion that's taking place the last several months is something that's unprecedented. You know, you, you typically see, particularly on heavy selling days, you know, all that, that correlation go to one that was always kind of the theme over the decades that I've been in the market. And that's just not happening here in the last several months. It probably maybe, let's say over the last year, but certainly over the last several months. Alex, this dispersion is just something that's unprecedented. Again, I think it's a combination of just the evolution of trading, the evolution of how people look at the market. Leverage has also certainly been highlighted this week. So I think, yeah, you're going to just something to probably get used to as we continue to see this market. Overall though, Alex, even with that dispersion in the market, you're still seeing it still climb that wall of worry, as we like to say, and holding on just below the all time highs. No, no, no question about it. I mean, index level things have been super resilient and it's been fascinating to, to watch and follow. But Dan appreciate it as always.