Amazon earnings updates: AI spend and AWS in focus for Wall Street ahead of results
Wall Street is preparing for Amazon's earnings report ahead of the closing bell. The primary focus will be on AWS revenue, given Amazon's heavy investment in cloud and AI over recent quarters. Investors will also be watching for updates on Amazon's chip developments, with CEO Andy Jassy expressing optimism about the project. The stock has seen a strong run in 2026, with a 14% year-to-date increase by Tuesday’s close. The earnings will be published after 4 p.m. ET, with a call scheduled for 5:30 p.m. ET.
Analysts are anticipating several key metrics: Mizuho Americas analyst Lloyd Walmsley expects weaker operating income due to rising fuel costs but believes investors will overlook this as a temporary issue. He anticipates positive commentary on AI in the shareholder letter, rising CPU demand, and continued growth in the Magnificent Seven stocks to drive further stock appreciation. Mizuho raised its AMZN target to $325 from $315.
Morgan Stanley forecasts AWS revenue growth of 29%-31% and a 30% year-over-year growth rate for the rest of 2026. The bank rates Amazon a 'Buy' with a price target of $300. Analyst Justin Post expects AWS growth of 28% and emphasizes the importance of quarter-over-quarter profit margin growth for AWS. Concerns about capex returns could resurface if AWS margins are low. Post notes that Microsoft and Alphabet’s earnings will also be reported on Wednesday, prompting a comparison of tech giants’ performance.
UBS is highly bullish on AWS, projecting 38% revenue growth for Amazon’s cloud business in 2026, higher than the current Street consensus of 26%. The bank’s 2027 operating income estimate is 39% higher than consensus and expects the Street to catch up. RBC Capital Markets highlights AWS revenues as a crucial metric, expecting at least 30% year-over-year growth to validate Amazon’s $200 billion capex guide. RBC rates Amazon an 'Outperform' with a price target of $300, implying 15% upside.
Wall Street’s consensus estimates include first-quarter net sales of $177.23 billion, with AWS net sales at $36.68 billion, Online Stores at $62.65 billion, and Third-Party Seller Services at $40.78 billion. Advertising services and Subscription Services are estimated at $16.9 billion and $13.07 billion, respectively. North America and International net sales are estimated at $102.08 billion and $38.59 billion. AWS revenue excluding FX is projected to grow by 25.7%, while Third-Party Seller Services and Subscription Services are expected to grow by 10.9% and 11%, respectively. EPS is estimated at $1.62, with an operating income of $20.75 billion and an operating margin of 11.7%. North America’s operating margin is expected to increase by 6.85%, while International’s is at 2.58%. Fulfillment expenses are estimated at $27.31 billion, and the Seller unit mix is projected at 60%. Second-quarter net sales are expected to rise to $189.15 billion, with operating income at $22.86 billion and capital expenditure at $47.44 billion.
Source: Business Insider