Amazon is set to release its Q3 earnings report, with analysts predicting earnings of $1.14 per share and revenue of approximately $157.2 billion.
The company's cloud computing division, Amazon Web Services (AWS), is expected to generate around $27.5 billion, while advertising revenue is projected at $14.3 billion. However, Amazon has warned that its sales may be impacted by a busy news cycle, making it difficult to accurately forecast sales.
Despite these challenges, Wall Street expects a revenue growth of about 10% for the quarter, marking the fifth consecutive quarter of low double-digit expansion. Earnings growth is expected to outpace revenue growth due to cost-cutting measures implemented by CEO Andy Jassy.
Since 2022, Amazon has undergone significant layoffs, cutting over 27,000 jobs, as part of an effort to streamline operations and improve profitability. Under Jassy's leadership, Amazon has focused on managing costs more rigorously, resulting in positive reactions from investors.
The company is projected to report an operating income of $14.7 billion for the quarter, a more than 31% increase from the previous year. This aligns with the company's guidance of operating income between $11.5 billion and $15 billion.
Jassy's emphasis on enhancing profit margins within the retail sector has attracted new investors, leading to a 23% rise in Amazon's stock price year-to-date. In addition to layoffs, Amazon has discontinued its Amazon Today rapid delivery service, further emphasizing its commitment to refining operational focus and eliminating unproven ventures.
During the third quarter, Amazon's annual Prime Day event achieved record-breaking sales, demonstrating the strength of its e-commerce platform. Looking ahead, analysts are interested in updates on Amazon's Project Kuiper satellite internet initiative.
The company plans to invest over $10 billion to establish a network of satellites in low Earth orbit, aiming to provide high-speed broadband services to underserved populations globally. While there are risks associated with the project, analysts see significant long-term revenue potential, targeting an audience of over one billion people.
The first full-scale mission for Project Kuiper has been delayed to early 2025 due to prioritization of U.S. Space Force missions by Amazon's rocket provider, United Launch Alliance (ULA).
As Amazon prepares to unveil its earnings, the performance of other major tech companies like Apple, Google parent Alphabet, Microsoft, and Meta will also influence market sentiment and investor confidence in the tech industry. Amazon's strategic decisions, particularly in cost management and investment in future technologies, will shape its trajectory. Analysts remain optimistic about Amazon's long-term growth prospects, given Jassy's commitment to operational efficiency and profitability.