Amazon Q3 Earnings Preview: AWS, Prime Video, Streak Of Analyst Beats On Watch

Amazon.com Inc AMZN could show off the strength of its AWS cloud segment when it reports third-quarter financial results after market close Thursday.

Earnings Estimates: Analysts expect the Seattle-based company to report third-quarter revenue of $157.19 billion. That’s up from last year's third-quarter total of $143.08 billion, according to data from Benzinga Pro.

Amazon missed revenue estimates from analysts in the last quarter but had beaten estimates in six straight quarters before that quarter. Overall, Amazon has beaten analyst estimates for revenue in eight of the last 10 quarters.

Analysts expect the company to report third-quarter earnings per share of $1.14, up from last year's third-quarter total of 94 cents per share. The company has beaten analyst estimates for earnings per share in seven straight quarters and eight of the last 10 quarters overall.

Amazon's earnings per share beats have all been by a double-digit percent in the six straight beats, according to data from Benzinga Pro.

Guidance from Amazon calls for third-quarter revenue to be in a range of $154 billion to $158.5 billion.

Read Also: Amazon Prime Big Deal Days 2024 Scores Record-Breaking Sales

What Experts Are Saying: Amazon could report strong revenue growth and operating margin expansion in the third quarter, Goldman Sachs analyst Eric Sheridan said in a recent note.

The analyst said Amazon's investments in expanding products and offering more lower priced items could shine through in the quarterly results.

Amazon's AWS business could see expansion with AI initiatives and prior headwinds minimizing.

Wedbush analyst Daniel Ives recently highlighted that Amazon stock has been relatively unchanged since the company's second-quarter results.

"We think investors should take advantage of this period of relative underperformance, and we reiterate our Outperform rating and $225 PT," Ives said.

Higher-margin advertising and AWS were items Ives cited that could show strength for Amazon in the short and long term.

Freedom Capital Markets Chief Global Strategist Jay Woods highlighted Amazon in his weekly newsletter as one of the most intriguing earnings reports for the week.

"They gave mixed signals in its financial outlook last quarter," Wood said.

The market strategist said slower-than-expected revenue in cloud and AWS may have contributed to a lack of excitement in the quarterly earnings.

"The guide was cautious as management's comments indicated that although AI growth is promising, it remains in early stages, leading some investors to hesitate about immediate upside potential."

Here are other analyst ratings on Amazon and their price targets:

• UBS: Maintained Buy rating, raised price target from $220 to $223
• Needham: Reiterated Buy rating with $210 price target
• JMP Securities: Reiterated Market Outperform rating with $265 price target
• Evercore ISI: Reiterated Outperform rating with $240 price target

Key Items to Watch: The company's AWS segment is likely to get the most eyes from analysts and investors for the quarterly results. AWS revenue was up 19% year-over-year in the second quarter.

Amazon CEO Andy Jassy said the company was working to continue reacceleration in AWS growth.

"As companies continue to modernize their infrastructure and move to the cloud, while also leveraging new Generative AI opportunities, AWS continues to be customers' top choice," Jassy said previously.

International revenue might be an area to watch as the segment saw 7% year-over-year growth in the second quarter, trailing the 9% year-over-year increase for the North America segment.

Amazon could also highlight other areas like its Prime Video streaming platform and its Twitch gaming segment. The company could highlight "Thursday Night Football" viewership for the 2024 NFL season and how it could help boost or has already boosted Prime subscribers in the fourth quarter.

Price Action: Amazon stock is up 2% to $193.70 on Wednesday versus a 52-week trading range of $131.72 to $201.20. Amazon stock is up 29% year-to-date in 2024.

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