By Senad Karaahmetovic
E-commerce giant Amazon (NASDAQ:AMZN) is scheduled to report on Thursday after the market close. Street is looking for an EPS of $0.17 on revenue of $145.7 billion.
Amazon stock has performed strongly in recent days after the stock managed to break above an important technical resistance around the $90 handle. As a result, shares are now up over 21% year-to-date (YTD) after hitting the lowest levels since March 2019.
Focus on AWS after Azure slowdown
Investors are likely to focus on the AWS growth after Microsoft (NASDAQ:MSFT) said it expects slowing Azure growth in the coming quarters.
"In our commercial business, we expect business trends that we saw at the end of December to continue into Q3," Amy Hood, Microsoft's chief financial officer, said on a conference call.
Microsoft reported its Intelligent Cloud business segment, which hosts Azure, saw revenue soar 18% to $21.51B, beating the $21.44B consensus. Specifically, Azure and other cloud services recorded a 31% jump in revenue.
For the last quarter, Amazon reported $20.5B in AWS revenue, missing the $21.1B consensus after posting the slowest revenue growth since 2014, when Amazon started to single out results for the unit.
What are analysts expecting from Amazon?
Here are fresh comments from some Amazon analysts ahead of the earnings report on Thursday.
Bank of America analysts: "We now forecast rev./GAAP Profit of $146.9bn/$3.0bn vs. Street at $145.7bn/$2.7bn. We think commentary on 1Q AWS trends will be the biggest risk following MSFT's Azure guide, but MSFT's stock reaction to 1Q outlook has calmed concerns, and AWS has an easier 1Q comp. We think retail can meet/beat a cautious 4Q guide, with Amazon gaining share in US, though margins a risk."
Credit Suisse analysts (raise PT to $171 from $142): "We maintain our Outperform rating, with the thesis based on the following: 1) e-commerce segment operating margin expansion as it grows into its larger infrastructure, 2) optionality for faster-than-expected FCF growth vis-à-vis its advertising segment, and 3) upward bias to AWS revenue forecasts and likely more moderate deceleration path as suggested by ongoing capital intensity in the business."
Barclays analysts (lower PT to $130 from the prior $140): "We see a solid backdrop for AMZN shares… Our Barclaycard data suggests overall trends held up better than feared as non-auto retail spend remained elevated vs. 2021 levels, and consumers took advantage of the promo-heavy environment to purchase household essentials."
Amazon stock price closed at $102.24 on Friday after gaining 5.13% last week.