A for Amazon, K for purchase

All five FAANG stocks have now reported results for the quarter — and for Mark Mahaney of Evercore ISI, the worst is behind one of the tech giants. That’s Amazon, which posted a total loss of $2 billion for the quarter ending in June. The company suffered a loss of $3.9 billion from its stake in Rivian.

“Amazon reported better-than-expected quarterly results, then released guidance for the September quarter that was roughly in line with expectations,” Mahaney, director of Internet research at Evercore ISI, told CNBC’s “Squawk Box Asia” on Friday. He stressed that given the risk of a global recession, Amazon is likely to lower its forecast.

Investors were encouraged by Amazon’s optimistic outlook, which indicated that consumer demand remained resilient and came despite a deteriorating outlook for consumer confidence in the US. This has made Mahani optimistic that the worst is over for Amazon, as he says the company is “doing really well.” Sales growth and margin expansion are expected to accelerate in the second half of the year despite inflationary headwinds.

“They’re rolling out really good product initiatives…They’ve speeded up delivery and increased their inventory. I think that has increased customer satisfaction and made Prime customers buy more,” noting that the company outperformed other retailers this quarter.

Mahani also noted the continued growth of Amazon Web Services and its advertising business. “This is a higher profit margin business that is growing faster than core retail, which will have a wonderful impact on margins. This revenue shift to higher margin, faster growing businesses is positive.”

“I love Amazon and I think it can continue to recover. There are a lot of things that have not gone well so far. Markets have not yet fully recovered and international business margins are still weak. I think these will improve over the next 12 months. Fundamentals will improve. So there is still plenty of room for improvement for both the company and the stock.”