Despite Amazon's impressive third-quarter results, Susan Li, the company's finance head, acknowledged during a call with analysts that the ongoing Israel-Hamas conflict has caused them to widen their fourth-quarter guidance due to the economic uncertainty the situation has created.
Despite investor worries that the Israeli-Palestinian conflict could damage global economic conditions, Amazon's online advertising arm saw its revenue surge 26% year-on-year in the third quarter, coming in at $12.06 billion, well above the $11.6 billion estimated by StreetAccount analysts. Total sales rose 13% year-on-year to $143.1 billion.
Insider Intelligence data shows that Amazon's current market share for digital advertising sits at 7.5%, lagging behind Alphabet with 28.4% and Meta with 20.1%. During the earnings call, CEO Andy Jassy spoke of opportunities for growth in Amazon's advertising sector, citing the NFL partnership and the increased viewership of "Thursday Night Football". He also mentioned that there was still much potential to be tapped into with video and grocery store ads.
Recent changes implemented by Apple in their 2021 iOS update have impacted the online advertising strategies of online social platforms, including Meta, Snap and X (formerly Twitter). These challenges have encouraged retailers to move their ad budgets from Meta to Amazon, with businesses seeing Amazon as having a stronger capability for targeting ads online despite the privacy update.
Meta has made large investments in AI this year to upgrade its online advertising platform, resulting in more firms, particularly based in China, increasing their spending on ads related to Facebook and Instagram. This week, the company reported an impressive jump in third-quarter revenue, with a 23% increase from the year prior, the highest growth rate since 2021. However, during a call with analysts, Chief Financial Officer Susan Li mentioned the unpredictable nature of the Middle East crisis caused Meta to revise its fourth-quarter guidance from $35.5 billion to a range of between $36.5 billion and $40 billion. This prompted a 2% drop in the share price on Thursday.Alphabet had strong third-quarter earnings and reported a 9% increase in Google ad revenue to $59.65 billion, while YouTube ads rose 12% to $7.95 billion. The tech juggernaut's total revenue for the quarter rose 11% to $76.69 billion.Snap, in its third-quarter earnings this week, decided against making formal guidance projections due to the volatile situation in the Middle East. Brad Gerstner, from Altimeter, commented on Meta regaining investor confidence.
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