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Amazon reports fourth-quarter earnings on Thursday.
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Investors will be watching growth in the AWS cloud unit and profitability levels in the retail division.
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The company’s stock is up 2.3% in 2023, slightly outpacing the market.
Amazon will report fourth-quarter earnings on Thursday after the closing bell.
Growth in Amazon’s AWS cloud unit, profitability levels in its retail division, and progress in growing its advertising and artificial intelligence business will be top of mind for Wall Street analysts.
Amazon’s stock was up 2.3% year-to-date through Wednesday’s close, slightly outpacing the S&P 500‘s 1.8% gain.
JPMorgan says Amazon’s stock can continue to climb higher
Despite Amazon’s solid rally over the past three months, JPMorgan thinks there is still upside left in the stock.
“Amazon is most liked and most owned across our group, but that does not deter our view that the stock can continue to climb higher,” JPMorgan said in a note on Monday.
But further growth in Amazon’s stock price will not be without volatility, as JPMorgan’s channel checks suggest that its all-important AWS unit saw a softening in growth towards the end of the fourth-quarter and into the first few weeks of 2024.
For the year, JPMorgan said it expects Amazon’s AWS cloud unit to grow 16.6% thanks to the integration of generative AI technology and new workloads.
Goldman Sachs says ‘AWS revenue growth will remain a key area of debate.’
Goldman Sachs said in a note earlier this month that Amazon is well positioned to scale its profit margins in retail and grow even more efficient from a cost perspective. That should ultimately help the company beat analyst estimates when it reports its fourth-quarter results.
The bank expects Amazon to report revenue slightly ahead of estimates at $166.5 billion, and AWS revenue growth of 14%, which would represent an acceleration of growth from its reported 12% jump in the third-quarter.
“We view Amazon as well positioned as a leader in all aspects of secular growth within our Internet coverage and reiterate our Buy rating into 2024 with a PT of $200 (from $190),” Goldman said.
Amazon’s consensus fourth-quarter net sales estimate is $166.21 billion
4th quarter
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Net sales estimate: $166.21 billion
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Online stores net sales estimate: $68.91 billion
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Physical Stores net sales estimate: $5.23 billion
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Third-Party Seller Services net sales estimate: $41.96 billion
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Subscription Services net sales estimate: $10.31 billion
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AWS net sales estimate: $24.22 billion
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North America net sales estimate: $102.88 billion
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International net sales estimate: $38.96 billion
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Third-party seller services net sales excluding F/X estimate: +15.9%
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Subscription services net sales excluding F/X estimate: +12.5%
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Amazon Web Services net sales excluding F/X estimate: +11.8%
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EPS estimate: $0.78
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Operating income estimate: $10.49 billion
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Operating margin estimate: 6.17%
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North America operating margin estimate: +4.12%
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International operating margin estimate: -1.27%
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Fulfillment expense estimate: $25.2 billion
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Seller unit mix estimate: 59.5%
1st quarter
Source: Bloomberg
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