Amazon is set to announce its first-quarter earnings after the bell on Tuesday, with analysts predicting earnings per share of 83 cents and revenue totaling $142.5 billion. Wall Street is also closely monitoring other critical figures in the report, including:
– Amazon Web Services generating $24.5 billion in revenue
– Advertising revenue expected to reach $11.7 billion
Analysts are forecasting a revenue growth rate of 12% for Amazon’s first quarter. This growth trend would signify a fourth consecutive quarter of expansion in the low double digits, displaying a slight uptick from the previous year. The company’s earnings have been outpacing revenue growth due to various cost-cutting measures, operational enhancements in fulfillment services, and stabilized spending on cloud services. Operating income projections stand at $11.2 billion, indicating a substantial increase of over 130% from the previous year.
Under the leadership of CEO Andy Jassy, Amazon has implemented stricter financial discipline, focusing on profitability while growing key services such as advertising, cloud computing, Prime memberships, and the third-party marketplace. The company has undertaken significant workforce reductions, cutting more than 27,000 jobs since late 2022. Notably, during the first quarter of this year, Amazon downsized its health and AWS divisions. Following a challenging period in 2021 and 2022, Amazon’s stock surged by 75% in the previous year and has gained 19% year-to-date, surpassing the Nasdaq Composite.
Analysts are particularly interested in Amazon’s AWS revenue, projecting a 12% increase for the first quarter. Additionally, the company’s advertising segment is expected to drive considerable growth, with revenue anticipated to surge by more than 23% year over year to $11.7 billion. Competitors including Meta, Google, and Snap recently exceeded analyst expectations in their digital ad earnings reports, setting a positive precedent for Amazon’s ad business. Wedbush analysts foresee robust growth in Amazon’s advertising division throughout the first quarter and anticipate sustained spending for the rest of 2024.
Market experts will be keen to see if Amazon follows its tech peers’ lead by introducing its inaugural dividend. Google’s parent company, Alphabet, unveiled its first dividend concurrently with its quarterly results, while Meta authorized its initial dividend in February. Amazon concluded 2023 with $73.4 billion in cash and equivalents, prompting speculation about potential shareholder rewards. The company’s earnings report will be discussed in detail during a conference call with investors at 5:30 p.m. ET, providing insights into Amazon’s financial performance and strategic outlook for the upcoming quarters.
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