4Q20 results at a glance
4 Takeaways from 4Q20 Earnings Call
With ongoing restrictions, we expect stay-at-home demand to continue supporting net sales in its international markets. In its 1Q21 guidance, AMZN has assumed about US$2bn of COVID-related costs, lower than the US$4bn in 4Q20. We believe that as normalcy returns, a further easing of COVID-related costs may lift margins over the next 1-2 years.
Still, we remain Neutral on AMZN. We believe demand for its cloud services will grow by mid-20% on the back of an improving economy, which may drive corporate spending on IT infrastructure. Ongoing stay-at-home restrictions and stimulus payments by the Biden administration may also support growth into 1H21. However, as normalcy accelerates in 2H21, YoY growth could slow from its high base in 2020 when there were widespread lockdowns.