Investing.com -- Shares in Amazon.com, Inc. (NASDAQ:AMZN) jumped by more than 9% on Friday after the e-commerce giant said that growth at its key cloud computing division slowed by less than expected in the second quarter, sparking hopes for a turnaround at the much-scrutinized unit.
The business, known as Amazon Web Services, posted revenue growth of 12% in the period ended on June 30. Bloomberg consensus estimates had called for an uptick of 9.48%.
Amazon previously warned that revenue at AWS had slowed to 11% in April, down from 16% in the first quarter and 29% in 2022, a trend that has been largely chalked up to clients attempting to squeeze as much as they can out of their cloud spending. However, Amazon executives noted that generative artificial intelligence has boosted demand for developing new computing workloads.
"[T]here's a lot of growth in front of us on AWS," Chief Executive Officer Andy Jassy said in a call with analysts following the release of the results.
Even though Amazon flagged that economic uncertainties remain, online store sales at the company jumped by 5% excluding currency effects to $53 billion, topping expectations.
The increase, along with recent cost cuts that have included steep headcount reductions, boosted income per share up to $0.65 and total revenue higher to $134.4B -- both above projections.
Analysts at Rosenblatt upgraded their rating of Amazon to "buy" from "neutral" and increased their price target for the stock to $184 from $111, citing a "constructive" earnings report.
"As the business resets, with efficiency a new focus for retail, and AI an emerging driver in cloud, the risk of impending economic headwinds looks less worrying, opening the door to higher multiple consumer growth stories," the Rosenblatt analysts said.