As Amazon prepares to release its first-quarter earnings report after the bell on Tuesday, analysts are eagerly awaiting the results. The projected numbers are significant, with expectations for earnings per share to reach 83 cents and revenue to hit $142.5 billion. The focus will also be on specific segments within Amazon’s operations, including Amazon Web Services and Advertising, with estimated revenues of $24.5 billion and $11.7 billion, respectively.
Analysts anticipate Amazon to report a revenue growth of 12% in the first quarter, signifying a fourth consecutive quarter of expansion in the low double digits. This growth trend is expected to represent a slight acceleration from the previous year. Additionally, earnings are projected to be on an upward trajectory, driven by cost-cutting measures, operational enhancements, and stability in cloud spending. The operating income is forecasted to reach $11.2 billion, reflecting a substantial increase of over 130% from the previous year.
Since Andy Jassy assumed the role of CEO, Amazon has demonstrated greater fiscal discipline in its operations. The company’s strategic focus on enhancing profitability through key services like advertising, cloud computing, Prime memberships, and the third-party marketplace has yielded positive results. Notably, Amazon has undertaken workforce restructuring efforts, with over 27,000 employee layoffs initiated since late 2022, continuing into 2024. Recent reductions in staff within the health and AWS divisions highlight the company’s commitment to operational efficiency.
Amid turbulent market conditions in 2021 and 2022, Amazon’s stock witnessed a significant upsurge of 75% in the previous year. The year-to-date increase of 19% has outpaced the Nasdaq Composite, which saw a growth of approximately 6.5%. Analysts are optimistic about Amazon’s growth potential, particularly within the AWS segment, expecting a 12% rise in revenue. The company’s sustained focus on generative artificial intelligence technology is anticipated to drive demand and revenue growth in the cloud computing division.
The advertising business remains a lucrative sector for Amazon, poised for substantial growth in the first quarter. Projections indicate a revenue increase of over 23% year over year, reaching $11.7 billion. With digital ad giants such as Meta, Google, and Snap surpassing analysts’ expectations in their recent earnings reports, Amazon is expected to follow suit. Analysts foresee robust growth in Amazon’s advertising business, driven by a mix of factors such as off-platform advertising opportunities, Prime Video ad monetization, and sponsored product growth.
Investors are keen to observe if Amazon will emulate other tech companies by announcing its maiden dividend alongside the earnings report. Recent moves by companies like Google and Meta in issuing dividends have set a precedent in the industry. Amazon, concluding 2023 with a substantial cash reserve of $73.4 billion, has the financial capacity to consider such a distribution. The upcoming conference call with investors at 5:30 p.m. ET will provide further insights into Amazon’s financial performance and strategic outlook.