Amazon earnings are coming - spotlight on AWS demand, profit guidance and chips
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Amazon (NASDAQ:AMZN) will report earnings on April 27 to expectations for revenue of $124.6B and EPS of $0.22. The tech giant has a wide guidance range for operating income of $0 to $4B and analysts expect a mark of $3.00B. EBITDA is anticipating coming in at $19.4B .
Guidance will be key as usual with the Amazon (AMZN) print. The consensus estimates for Q2 are at revenue of $130.1B, EPS of $0.31, and operating income of $4.74B.
As always, AWS is top of mind with the Amazon (AMZN) earnings report. Monness, Crespi, Hardt forecasts AWS revenue to grow by 15% year-over-year during the quarter to $21.16 billion, down from 20% growth in Q4 and the 37% increase from a year ago. Looking further ahead, JPMorgan noted a recent shareholder letter outlined still-strong customer demand for AWS and a positive long-term growth outlook, which bodes well for the readout on the earnings call. The firm sees increasing potential for positive margin surprises as 2023 progresses with Amazon generating retail efficiencies. Meanwhile, Bank of America said decelerating inflation and a more favorable consumer spending environment could boost demand for the balance of the year, while the prospect of lower interest rates could help the trading multiple expand again by the end of the year
On Seeking Alpha, Investing Group Leader Victor Dergunov thinks Amazon (AMZN) will likely provide in-line or slightly better-than-expected EPS. However, he warned the stock could drop if the e-commerce giant reports a revenue miss and worsening guidance. "While this is a bearish scenario, I suspect the outcome will be more favorable than the market expects. Amazon's EPS and revenues could beat estimates, with the company providing proper forward guidance," he noted.
The Amazon (AMZN) conference call could include updates on consumer spending trends, the company's job cuts, and other cost-cutting measures in place. A wildcard with the call could be an update from execs on Amazon's new chips that have been generating attention.
Amazon (AMZN) heads into its earnings report with 14 out of the last 17 EPS revisions to the downward side over the last 90 days. Options trading implies a share price swing of 6.5% after the report drops. Amazon slumped 8.4% on the day after its last trip into the earnings confessional.
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