Amazon is rolling out large corporate layoffs - what does it mean for the stock?
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The major round of layoffs at Amazon (NASDAQ:AMZN) this year are being seen as an indication that the e-commerce giant is making efforts to be efficient amid overall lowered growth expectations for 2023.
The newly-announced reduction by Amazon (AMZN) of 9K corporate employees across the AWS, PXT (People, Experience, and Technology), Advertising, and Twitch divisions came on top of a round of 18K job eliminations announced by the company in January.
The implication for the stock is somewhat mixed, according to Bank of America analyst Justin Post.
"We do not see the news as constructive on AWS demand trends, with Bears focused on AI competition, competitive price cuts, and further workload optimization ahead. Meanwhile, Bulls suggest the Cloud sector could already be halfway through the corporate cost optimization cycle, and expect significant reduction in y/y AWS cost growth by 3Q could represent $1.6bn of annualized savings."
BofA estimates $1.6B in incremental annualized savings or about 7.8% of the firm's forecast for $20.9B in GAAP operating income for 2023. The firm's broad read on Amazon (AMZN) is that margins could improve by Q3 with costs growth slowing and the Seattle tech company reportedly pausing construction on its HQ2 in Arlington, Virginia. Despite the slowing economic environment, BofA thinks Amazon (AMZN) will remain constructive on the potential for long- term AWS revenue reacceleration, which could attract tech investors back to the stock.
BofA kept a Buy rating on Amazon (AMZN) and price objective of $135.
Shares of Amazon (AMZN) rose 0.59% premarket to $98.29.
Read more details on Amazon's job reductions. 
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