Amazon hits $1 trillion on blowout earnings beat—what the pros are watching now

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Amazon beats Street on earnings and revenues—Three pros on what they're watching now

Talk about a prime earnings report.

Amazon's monster earnings-per-share and revenue beat drove the stock's market cap above the $1 trillion mark at Friday's open as Wall Street digested the knockout results for one-day shipping, Amazon Prime and Amazon Web Services.

Industry professionals were equally impressed. Here's what three of them said about Amazon hot off the report:

Stephanie Link, a CNBC contributor and Nuveen's former head of global equities research, was watching Amazon's competitors on the retail side:

"It was painful last year relative to the other FANGs, right? We just talked about it, how it lagged. But the bogey for AWS was 31% growth, so, they did something like about 33% growth in AWS. Obviously, margins [were] up also a little bit better than expected, and that's why you've got the operating leverage. … The retail side is … disappointing this quarter because everyone had such great expectations, so, this is very encouraging, for sure. They're definitely taking share. … I do think that Target, Walmart, Costco, I think they're very much more competitive than they ever have been. Maybe they can all coexist at this point, though, because those numbers I expect to be pretty good as well."

Tom Forte, a consumer technology analyst at D.A. Davidson, was impressed by the e-commerce giant's profitability:

"What stands out to me is the profitability. So, I think that if you look at the fourth quarter, we knew that the first-party retail effort did well on one-day Prime, but, clearly, the cloud computing effort did incredibly well. That drove much better-than-expected profitability in the quarter, so, I think that's the real standout, the EPS beat. ... So, going into the quarter, the big question mark was how should we think about incremental competition in the cloud? So, you talked about the $4 trillion market caps. The commonality is three of them are cloud computing: Microsoft, Amazon and Google. So, the big question mark was the loss of [the contract for Pentagon cloud computing project] JEDI. The numbers are very strong, but I do look for additional details on how the company intends to be operating in a more competitive cloud environment in 2020."

James Cakmak, a partner at Clockwise Capital, hesitated to give investors the all-clear on Amazon:

"[With] the core business, I think that's discretionary if they want to pull the levers or not in terms of investment. But AWS I think is a little bit murkier because you're dealing with a low-asset productivity business that is prone to a lot of competition as long as you throw money at it, and I think that you can potentially see an increasing amount of pricing pressure as we go forward. And that puts into question the level of investments that they can make into their logistics efforts. So, I think that you saw a big beat this quarter, but what we have to look at is the free cash flow potential in the coming quarters and the degree to which they can invest, because what can happen is if they cannot invest in larger chunks today, you could see, potentially, depressed earnings in the next couple of quarters."

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