Amazon Stock Earnings Preview: AMZN fills gap as market expects beat

Amazon stock has jumped more than 4% ahead of the market open.
Amazon CEO Andy Jassy leads the earnings call after Thursday's market close.
Wall Street expects $0.17 in EPS on $147.8 billion in revenue for Q4.
Analysts expect cloud growth to slow.

Clay Webster FXStreet

One day after Federal Reserve Chair Jerome Powell charged up markets by saying any future interest rate hikes would depend on economic data, an admission the market took to mean the hiking cycle was over, Amazon (AMZN) stock is preparing for an earnings beat after the close as the stock has added 4.3% at $109.70 in Thursday's premarket.

Wall Street consensus for the quarter ending in December is $0.17 in GAAP earnings per share (EPS) on $145.77 billion in sales. The same quarter one year ago garned $1.39 a share on revenue that topped $137 billion.

Amazon stock earnings preview: Can AWS slow less than Azure?

Last week Microsoft (MSFT) disgruntled investors when Chief Financial Officer Amy Hood said growth in its Azure cloud business would drop from ~35% growth to ~30% in Q1 as corporations trimmed their spending in the face of an expected recession.

As the biggest purveyor of data centre and cloud infrastructure globally – at the end of the third quarter Amazon Web Services (AWS) held a 34% market share to Azure's 21% – Amazon's share price will rise or fall based on its cloud unit. AWS makes up about 16% of Amazon revenue at last check but produces a much greater share of the company's profits. During the third calendar quarter, AWS grew 27.5%, so the market will watch how annual growth in Q4 compares to that figure.

Bank of America Securities, MKM Partners and Oppenheimer all put out notes in the past week expecting that Azure's deceleration will translate directly to a slowdown at AWS. If that takes place, expect AMZN stock's regular session gains to be erased.

Besides cloud, Amazon needs to show resiliency in retail sales from its core business. According to data compiled by Mastercard (MA), ecommerce sales rose 11% YoY in the fourth quarter, so that is a positive sign for Amazon.

Lastly, the market will focus on how the 18,000 job cuts announced in January will affect guidance on margins. Expect healthier margins to lead to a larger uptick in the AMZN share price afterhours.

Amazon stock forecast

Amazon stock has rallied up to the top of the demand zone that worked well as support during the May through July period of 2022. That zone ranges from $101 to $109.50. Coincidentally, this also closes the gap from the gap down on October 28.

A break above this zone would allow bulls to retest the supply zone between $120 and $122 that acted as resistance on five occasions last October. Support sits nearby at $92.50 in the case of a major miss.

AMZN daily chart

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

GBP/USD slides below 1.3250 after failing to break through 23.6% Fibo

The GBP/USD pair meets with a fresh supply during the Asian session on Wednesday and moves away from a nearly two-week high around the 1.3275 region, touched the previous day. Spot prices currently trade around the 1.3235 zone, down 0.20% for the day, as traders look to speeches from Bank of England Governor Andrew Bailey and Federal Reserve Chair Kevin Warsh for a fresh impetus.

EUR/USD stays offered, breaks below 1.1400…again

EUR/USD adds to Tuesday’s slight losses and drops below the 1.1400 yardstick in the latter part of Wednesday’s NA session. The pair’s decline comes in response to the persistent recovery in the US Dollar, which seems to have met extra support following the cautious tone from Fed’s Warsh in his comments at the ECB Forum.

Gold recovers but sellers hold the grip

Gold keeps the bullish performance in place on Wednesday, although is now giving away part of its earlier advance past the $4,100 mark per troy ounce. The precious metal’s marked rebound comes despite the US Dollar’s bid bias, higher US Treasury yields across the curve and positive headlines from the Middle East.

Dogecoin vs Shiba Inu: DOGE and SHIB start July with similar setups

The cryptocurrency market shows subtle signs of rebounding on Wednesday after facing intense headwinds over the past few weeks, largely attributed to geopolitical tensions, macroeconomic uncertainty and risk-averse sentiment. Dogecoin (DOGE) and Shiba Inu (SHIB) are holding above pivotal support levels at $0.0700 and $0.0000040, respectively, suggesting investors are ready to reengage.

Warsh stays on message as inflation remains the Fed's top priority

At the ECB Forum in Sintra, Fed Chair Kevin Warsh largely followed the script, offering little to change the market’s current view on monetary policy.

Just like Fed, is BoJ’s independence under threat?

When talking about central bank independence, most of the focus has been on Donald Trump’s pressure on the Federal Reserve. But a similar story, a quieter one for now, seems to be happening on the other side of the Pacific: Japan’s government may be testing the Bank of Japan’s independence.