Amazon set to report Q3 earnings after the bell

Amazon is set to release its third-quarter earnings report, and Wall Street is paying close attention to a few key metrics. The company is expected to report 11% growth in revenue for the third quarter. However, Amazon has been dealing with some challenges, including slowing growth in its cloud computing business and e-commerce sales.

Andy Jassy, CEO, Amazon

Analysts are forecasting earnings per share of 58 cents and revenue of $141.4 billion for the third quarter. One of the areas of focus will be Amazon Web Services (AWS), the company’s cloud computing division, which is expected to generate $23.2 billion in revenue. Additionally, the advertising business is expected to contribute $11.6 billion in revenue.

Amazon’s growth slowed significantly last year due to factors like rising inflation and economic concerns. While there has been a slight uptick in expansion in 2022, it still falls short of the company’s usual growth rates. The retail business is expected to show some improvement as consumers cautiously resume discretionary spending.

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The third quarter is anticipated to see an 11% growth, which represents a slight acceleration compared to the past few quarters. During the pandemic, e-commerce sales thrived, but they slowed down as consumers began returning to physical stores.

Investors will be particularly interested in the company’s outlook for the fourth quarter, which includes the crucial holiday season. The results of Amazon’s Prime Day sequel, held in October and reportedly surpassing last year’s event, will also be included in the December quarter’s report.

Analysts surveyed by LSEG are anticipating fourth-quarter earnings per share of 66 cents and revenue of $166.6 billion, indicating a nearly 12% increase from the previous year.

The cloud computing business, AWS, which has been a significant profit driver for Amazon, will be closely watched by Wall Street. Growth in this division has slowed as large businesses have sought to control their spending.

The surge in demand for generative artificial intelligence has led to increased cloud workloads, which should benefit AWS and its competitors. However, Google Cloud and Microsoft have reported mixed results in this area. Google Cloud fell short of consensus estimates, while Microsoft’s Azure cloud unit grew faster than expected, causing concern about market share.

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Amazon’s stock has performed well this year, with a 42% increase, surpassing the Nasdaq’s 23% gain. The company’s cost-cutting efforts have been well-received by investors. CEO Andy Jassy announced plans to cut 9,000 jobs in March, building on the 18,000 layoffs announced late last year and into early 2022. These reductions primarily affected employees in various divisions, including advertising, cloud computing, Twitch livestreaming, and human resources.

In conclusion, Amazon’s upcoming earnings report will shed light on its performance in the third quarter, with particular attention to its revenue growth, AWS business, and outlook for the holiday season and beyond.

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