When Amazon reports its first-quarter earnings after the bell on Tuesday, analysts are expecting some notable figures. According to LSEG, anticipated earnings per share are 83 cents with revenue expected to reach $142.5 billion. Wall Street is particularly attentive to a few key numbers, such as Amazon Web Services revenue projected to hit $24.5 billion, and advertising revenue expected to amount to $11.7 billion.
Based on analyst predictions, Amazon is expected to reveal a 12% revenue growth in the first quarter. This would mark the fourth consecutive quarter of expansion in the low double digits, representing a slight acceleration from the previous year. Earnings growth is outpacing revenue growth significantly, attributed to cost-cutting measures, operational adjustments in fulfillment processes, and stability in cloud service spending. It is estimated that the company will generate an operating income of $11.2 billion, indicating a remarkable increase of over 130% from the previous year.
Under the leadership of CEO Andy Jassy, Amazon has showcased improved financial discipline while simultaneously nurturing profitable sectors such as advertising, cloud computing, Prime memberships, and the third-party marketplace. To strengthen the company’s financial position, Amazon initiated significant layoffs, letting go of more than 27,000 employees since late 2022. This cost-saving initiative continued into 2024, with hundreds of job cuts in the health and AWS departments during the first quarter.
Following a challenging period in 2021 and 2022, Amazon’s shares surged by 75% in the previous year. Year to date, the stock has shown a 19% increase, surpassing the Nasdaq Composite, which only grew by approximately 6.5%. Looking ahead, analysts anticipate a 12% rise in AWS revenue for the upcoming quarter, slightly slower than the previous quarter but notably higher than the same period in 2023. Executive statements in February indicated an expected rise in demand for generative artificial intelligence technology, further fueling growth prospects for AWS.
Another area of interest is Amazon’s advertising sector, which is projected to experience a growth rate of over 23% year over year, reaching $11.7 billion in revenue. Industry peers like Meta, Google, and Snap recently exceeded analysts’ expectations in their earnings reports. Wedbush analysts foresee robust growth in Amazon’s advertising business for the first quarter, with optimistic spending projections for the remainder of 2024.
Market analysts will closely monitor Amazon’s decision regarding the possibility of issuing its first dividend, following the footsteps of other tech companies like Google and Meta. By the end of 2023, Amazon had accumulated $73.4 billion in cash and equivalents, prompting speculation about potential investor rewards. The company’s scheduled conference call at 5:30 p.m. ET will provide further insights into the earnings report and future strategic directions.
The upcoming Amazon earnings release is generating significant interest among investors, analysts, and industry observers. The company’s performance in key revenue-generating areas, operational changes, and future growth prospects will undoubtedly shape market expectations and influence investor decisions in the coming quarters.
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