Amazon Q3 preview: focus on AWS as the driver of future growth
07:36, 25 October 2023
Amazon (AMZN) will deliver its Q3 earnings after the closing bell on Thursday. We preview what the markets are expecting heading into the results.
What are analysts forecasting for Amazon’s Q3 results?
| Revenue | EPS | AWS Revenue | Q4 EPS Guidance | |
| Estimate | $141.44B | $0.58 | $23.08B | $0.66 |
Forecasts by Reuters
As per data sourced by Reuters, earnings per share are expected to come in slightly lower in the third quarter, mostly because of precited higher costs offsetting higher revenues. The second quarter beat expectations across the board as most segments in Amazon’s business model topped estimates.
The data also shows total revenue is expected to have grown 11.28% year-on-year. Advertising revenue is expected to show yearly growth of 19.7% whilst Amazon web services (AWS) – its cloud computing business – is expected to have grown 12.4% in the year. AWS is expected to be a big driver going forward as the AI revolution is expected to continue.
There is still room for Amazon to grow in the e-commerce space. According to data published by the US Department of Commerce, in the second quarter, despite the rapid growth of online sales, which was accelerated by the pandemic, e-commerce only accounted for around 15% of retail sales in the US. Based on this data, Amazon is in a good position to continue growing and dominating the space as it continues to branch out into other sectors like cloud services, advertising, and physical stores.
What is your sentiment on AMZN?
Broker recommendations and consensus price target
Strong Buy | Buy | Hold | Sell | Strong Sell | Consensus Price Target |
18 | 33 | 2 | 0 | 0 | $170.30 |
Analysts polled by Reuters continue to be strongly bullish on Amazon’s stock with 96% opting for a strong buy or buy recommendation. The consensus target price is currently at $170.30, roughly 36% higher than where it currently stands.
Source: refinitiv AMZN share price: technical analysis
The Big Tech reports come at a time when US yields are pushing to 16-year highs and investors are slowly shying away from risk as tensions in the Middle East rise. Amazon’s share price has dropped in recent days after a failed attempt to rebound earlier this month. The Magnificent Seven are all facing increased bearish pressure as they have been thought of as the drivers of the 2023 stock market rally, which means many may view them as being overbought. That said, they are often viewed as safer investments by stock traders as they are deemed as “too big to fail” and therefore they may attract value investors in these times of uncertainty. As mentioned above, analyst consensus is for the stock to rise towards $170 over the coming months.
AMZN daily chart
Source: tradingview Past Performance is not a reliable indicator of future results.
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