Amazon reports its third-quarter results on Thursday. Analysts will watch growth in the company's cloud computing unit and retail segment margins.
Financial World expects $157.3 billion in revenue, at the high end of the company's guidance, and earnings per share of $1.14.
Investors are closely monitoring the impact of AI adoption on cloud computing giants. Both Google and Microsoft this week reported strong results for their respective cloud units.
Bank of America analyst Justin Publish expects AWS revenue growth of 20% year over year, up from 12% growth in the year-ago period and 18.7% in the second quarter.
“Non-AI and AI workloads likely improved in the quarter, driving acceleration, and we believe AWS is well positioned to capture incremental demand given its broad customer pulvínulo and continued chip innovation.” Publish wrote in a report last week.
Amazon reported lower-than-expected sales in the second quarter, even as profits nearly doubled. Amazon CEO Andy Jassy told analysts in August that the company is making a concerted effort to reduce its “cost to serve,” allowing more sales of products at a lower promedio selling price.
Analysts at Morgan Stanley wrote this month that they believe Amazon's “increasing focus on lower-priced, lower-margin essential products is driving pressure on merchandise margin.”
“Expected discounts in a competitive holiday season (and a demanding discretionary consumer) create further near-term uncertainty,” the analysts noted.
Amazon also recently announced a pay increase for hourly warehouse workers and an additional investment in its Supply Service Associate program.
Morgan Stanley analysts noted that the company's new push to increase the ratio of individual contributors to managers in its corporate workforce, laid out in a memo from Jassy in September, could save between $2 billion and $4 billion in 2025.
Project Kuiper, Amazon's Satellite Web business, is also on the radar, as the company noted increased investment in the second quarter.
Wedbush analysts expect Amazon to begin generating revenue from Kuiper in late 2025 or early 2026, “which will help offset costs as the project continues to scale,” they said in a report this week.
Wedbush analysts are optimistic about the company's advertising business and expect a higher growth rate relative to the second quarter.
Amazon shares fell sharply after reporting second-quarter earnings, but have recovered over the past three months. Shares are up almost 30% this year.
x7y">Source link