One category that caught our eye in the retail sales report on Tuesday was a jump in online shopping — a major positive for Club holding Amazon (AMZN), the country’s biggest e-commerce retailer. Headline U.S. retail sales came in softer-than-expected for June, rising 0.2% versus the 0.5% increase economists were expecting, according to the Commerce Department. But the retail sales control group, which excludes receipts from autos, building materials retailers, and gasoline stations, was up 0.56% compared to the 0.5% consensus estimates. The change in monthly sales revealed e-commerce as a bright spot in a mixed report. Online sales for the month accelerated to 1.9%, while sales at department stories and groceries fell 2.4% and 0.7%, respectively. It’s safe to say Amazon, which accounts for nearly 40% of all sales in the United States, is a huge driver of those sales. Though not reflected in the June report, the e-commerce giant is coming off what Wall Street believes to be a positive Prime Day, an annual online shopping event held on July 11-12 in 24 countries that offered deep discounts to Prime members. Analysts at Telsey Advisory Group said Prime Day appeared to have “created a spark of spending across retail,” in a recent research note. Amazon’s web traffic increased 25% within 13 hours of the event, according to analysts’ checks on Google data trends on Prime Day. Over the long run, they expect Amazon to “continue to gain market share” through its 200 million Amazon Prime subscriber base. Moreover, the company’s activity into pharmacy, grocery, fashion, home, and other consumer-focused businesses “should continue to boost Amazon’s value.” The strong June retail sales number and bump from Prime Day speaks to a favorable end to the second quarter and start to the third for the e-commerce behemoth. We’ll be listening closely for additional information on the sales trend that management is seeing when the company reports second-quarter earnings later this month. While Amazon dominates the online retail space, it has work to do in another area of its diversified business. Growth deceleration in the company’s cloud unit, Amazon Web Services, due to customers optimizing their cloud budgets, has been a drag on AMZN stock, preventing it from moving to greater heights. There’s a belief among investors that Amazon’s initiatives in generative artificial intelligence will be a catalyst that reinvigorates its cloud business to help growth inflect in the fourth quarter. Jim Cramer has said that gen AI could be a needle mover, but he doesn’t see evidence of AWS coming back so soon. If AWS growth inflects, then the stock would likely go higher. Given the stock’s 58% year-to-date run, and uncertainty on the trajectory of AWS growth, we won’t buy the stock ahead of its quarterly results. At the same time, we think investors should own AMZN stock given that Prime is such a good value, which supports e-commerce growth and the shift to cloud computing remains a long-term secular growth driver. But do we see reacceleration in AWS in the third or fourth quarter? 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 list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will 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 has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
The Amazon Prime logo is displayed on the side of an Amazon delivery truck on June 21, 2023 in Richmond, California.
Justin Sullivan | Getty Images
One category that caught our eye in the retail sales report on Tuesday was a jump in online shopping — a major positive for Club holding Amazon (AMZN), the country’s biggest e-commerce retailer.
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