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Amazon Q3 preview: focus on AWS as the driver of future growth

By Daniela Hathorn

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? 

 RevenueEPSAWS RevenueQ4 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?

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GME

25.24 Price
+0.800% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 21:00 (UTC)
Spread 0.15

NVDA

123.64 Price
+4.700% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 21:00 (UTC)
Spread 0.14

TSLA

251.95 Price
+5.240% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 21:00 (UTC)
Spread 0.17

AMD

154.85 Price
+2.220% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 21:00 (UTC)
Spread 0.25

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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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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