“Second-quarter results beat our expectations almost across the board, with torrid growth in advertising, acceleration in Amazon Web Services to 49 percent year-over-year growth, significantly improving margins across North America and international retail businesses and new highs in Amazon Web Services operating margins, driven by operating efficiencies at Amazon Web Services, international retail, domestic fulfillment center spend, and higher Advertising revenue which comes in at high incremental margins. Third-quarter revenue guide of $54 billion to $57.5 billion is modestly below the Street at $58.1 billion, but operating income outlook of $1.4 billion to $2.4 billion is significantly better than the $1.2 billion consensus estimate. Amazon remains our top pick among the large cap Internet names, with a large and growing total addressable market, an improving product and user experience, rapid growth in its highest margin businesses, and a relentless focus on execution and ongoing efficiency improvements.”
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