Amazon’s cloud revenue growth rate and its artificial intelligence initiatives will be closely scrutinized when the company reports second-quarter earnings Thursday afternoon, Aug. 3.
Wall Street analysts expect the company to report net sales (revenue) of $131.5 billion, up 8.5% from a year ago, as reported by Yahoo Finance. Analysts expect earnings of 35 cents a share, vs. a loss of 20 cents a share a year ago (which included a valuation loss on the company’s Rivian Automotive investment).
In its prior guidance for the second quarter, Amazon said it expected net sales between $127 billion and $133 billion; and operating income between $2 billion and $5.5 billion, compared with $3.3 billion in operating income a year ago.
Amazon “should benefit from an uptick in macroeconomic sentiment across the board,” wrote Wedbush analyst Michael Pachter in a note to clients this week.
“Given Amazon’s exposure to both consumer and corporate spending we see the company as well positioned to benefit from a greater consumer confidence (through subscription, online stores, physical stores, and third-party seller services) and from increased corporate spending (through AWS and advertising services),” Pachter added.
Amazon Web Services revenue growth declined to 15.8% in the first quarter of the year, down from a growth rate of 36.5% a year earlier, part of a trend of slowing growth in the market-leading public cloud platform during the past year.
Microsoft and Google both posted strong cloud results in their earnings reports last week, benefitting in part from early interest in infrastructure and services to help corporate customers develop generative AI applications.
Amazon made a series of generative AI announcements at an AWS event in New York last week, including new and updated pre-trained large language models to power AI applications.
In its e-commerce business, Amazon on Monday announced a new milestone for delivery speeds after overhauling its U.S. operations to put more items closer to customers.
Amazon’s online stores sales remain its largest source of revenue, although the portion declined to 40% in the first quarter from more than 60% in 2017. Third-party seller services and AWS have each become a bigger proportion of revenue at 23% and 17%, respectively, in the first quarter.
Amazon Prime Day took place after the quarter ended and won’t be reflected in this week’s report.
Check back Thursday for coverage of the second-quarter earnings report.