One category that caught our eye in Tuesday’s retail sales report was an increase in online shopping – a major boost for Club Holding Amazon (AMZN), the nation’s largest e-commerce retailer. According to the Commerce Department, U.S. retail sales were weaker than expected in June, rising 0.2% versus the 0.5% increase economists expected. But the retail sales control group, which excludes revenue from automobiles, building materials retailers and gas stations, rose 0.56% from consensus estimates of 0.5%. The evolution of monthly sales revealed that e-commerce was a bright spot in a mixed report. Online sales for the month accelerated to 1.9%, while shelf and grocery store sales fell 2.4% and 0.7%, respectively. It’s safe to say that Amazon, which accounts for nearly 40% of all sales in the United States, is a huge driver of those sales. Although not reflected in the June report, the e-commerce giant is emerging from what Wall Street views as a positive Prime Day, an annual online shopping event held July 11-12 in 24 countries that offered significant discounts to Prime members. Analysts at Telsey Advisory Group said Prime Day appeared to have “created a retail spending spark,” in a recent research note. Amazon’s web traffic increased 25% within 13 hours of the event, according to analyst checks on Google’s Prime Day data trends. In the long term, they expect Amazon to “continue to gain market share” from its base of 200 million Amazon Prime subscribers. Additionally, the company’s business in pharmacy, grocery, fashion, home and other consumer-focused businesses “should continue to drive Amazon’s value.” June’s strong retail sales figure and Prime Day rally point to a favorable end to the second quarter and start of the third for the e-commerce giant. We’ll be listening carefully to any additional sales trend information that management sees when the company releases its second quarter results later this month. As Amazon dominates the online retail space, it has work to do in another area of its diverse business. Slower growth at the company’s cloud unit, Amazon Web Services, due to customers optimizing their cloud budgets, dampened AMZN stock, preventing it from hitting higher highs . Investors believe Amazon’s initiatives in generative artificial intelligence will be a catalyst that will reinvigorate its cloud business to help moderate growth in the fourth quarter. Jim Cramer said the AI generation could be a needle mover, but he sees no evidence of AWS returning any time soon. If AWS growth falters, the stock will likely rise. Given the stock’s 58% year-to-date gain and uncertainty over AWS’ growth trajectory, we won’t buy the stock until its quarterly results. At the same time, we believe investors should hold AMZN stocks given that Prime is such a good value, which supports the growth of e-commerce and the shift to cloud computing remains a long-term secular growth driver. But are we seeing a re-acceleration of AWS in Q3 or Q4? Will AI be another tailwind? We will have to wait and see. (Jim Cramer’s Charitable Trust is long AMZN. See here for a full stock listing.) As a CNBC Investing Club subscriber with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AS WELL AS OUR DISCLAIMER. NO OBLIGATION OR FIDUCIARY DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
The Amazon Prime logo is displayed on the side of an Amazon delivery truck on June 21, 2023 in Richmond, California.
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One category that caught our eye in Tuesday’s retail sales report was an increase in online shopping – a major positive for Club holding Amazon (AMZN), the nation’s largest e-commerce retailer.
