Amazon (AMZN, Financial) is scheduled to release its third-quarter financial results on October 31, 2024, and investors are keenly watching the performance, particularly in the high-margin services, which include AWS. Building up from a second quarter that essentially fired on all cylinders in terms of earnings per share, although missing its revenue estimates slightly, the e-commerce titan is under pressure to deliver continued results and smooth market concerns about its spending.
Specifically, while the quarterly figures fell slightly short of the $148.8 billion predicted by market gurus, Amazon nonetheless recorded gross sales of $148 billion in Q2; at the same time, Amazon found a way to almost double its operating income to $14.7 billion of which AWS rose by 19% YoY. This growth stood at a 1% point higher than Wall Street's projection of $17.5 billion. This testifies to the centrality of AWS to Amazon's revenue plan. However, the merchandise stock fell by as much as 8% after its earnings release, mainly boosted by a bleak forecasted profit for the subsequent quarter and unrealistic market expectations.
Regulated on this aspect, for Q3, they have set a revenue range of $154 billion—$158 billion, with 9.5% growth expected at the midpoint. Still, this outlook was slightly below the street's double-digit growth estimate, which the company has been failing to meet due to its top-line and capital-expenditure conundrum. Proper investment in AI was 54% higher YoY in Q2.
When Amazon comes under the earnings lens, the firm's capacity to grow these investments in the face of the profit margin will be crucial. Investors will also focus on advertising revenue here, which has been growing at a healthy rate, but the pace was slightly slower in Q2. The result of these dynamics will probably affect Amazon's stock trend and investor perceptions while it is operating and responding—Baghdiantz, 2015, in a landscape characterized by high expectations and significant fluctuations in the market.
