Amazon is set to unveil its third-quarter results this Thursday, and all eyes are on the numbers as analysts anticipate a significant performance amid challenging circumstances. With the company facing distractions from global events affecting consumer focus, expectations are tempered yet hopeful.
Analysts predict Amazon will report earnings of $1.14 per share and revenue of $157.2 billion, with Amazon Web Services (AWS) expected to generate $27.5 billion and advertising revenue projected at $14.3 billion. Despite these optimistic figures, CFO Brian Olsavsky cautioned that a whirlwind of current events—from the Paris Olympics to political unrest—could impact sales, emphasizing that “customers only have so much attention.”
Amazon's revenue growth is projected at around 10%, marking the fifth consecutive quarter of low double-digit expansion but a slowdown from the previous year’s 12.6% growth. This dip is accompanied by significantly faster earnings growth, a trend fueled by CEO Andy Jassy’s aggressive cost-cutting measures, which have included the largest layoffs in Amazon’s history, totaling over 27,000 positions since 2022. Analysts have praised these efforts, contributing to a year-to-date increase of about 23% in Amazon's stock price.
This quarter, Amazon expects to report an operating income of $14.7 billion, up more than 31% year-over-year, exceeding previous guidance of between $11.5 billion and $15 billion. Jassy's focus on improving profit margins in the retail sector has attracted a new wave of investors, as noted by RBC Capital Markets analyst Brad Erickson, who highlighted the positive shift under the newer CEO's leadership.
As part of this busy earnings week, Amazon is joining tech giants like Apple, Google, and Microsoft in sharing financial insights. The company's recent Prime Day event in July reportedly brought in record-breaking sales, with online spending in the U.S. reaching $14.2 billion, aligning with expectations.
Looking ahead, analysts are eager to hear updates on Project Kuiper, Amazon’s ambitious satellite internet initiative aiming to invest over $10 billion in a network of 3,236 satellites to provide global high-speed internet access. Despite potential risks, including delays in satellite launches, analysts like Oppenheimer’s Jason Helfstein see significant long-term revenue opportunities, targeting an audience of over a billion people.
As Amazon prepares to release its earnings after the bell, the anticipated conference call promises to shed light on the company's strategic direction and its response to the evolving market landscape. Investors will be keen to gauge how Amazon plans to navigate these challenges while continuing to innovate and expand its reach.
