Amazon set to report earnings after disappointing reports from Big Tech

Here's what to expect today from Amazon's Q3 earnings. Read More...

Amazon (AMZN) is set to report its third quarter earnings after market close on Thursday.

Here’s what Wall Street’s anticipating from the e-commerce giant, according to Bloomberg:

Revenue: $127.63 billion expected versus $110.8 billion in Q3 2021

Adjusted Earnings Per Share (EPS): $0.45 expected versus $6.12 in Q3 2021 (after a 20-for-1 stock split)

Amazon Web Services (AWS) Net Sales: $21.01 billion expected versus $16.11 billion in Q3 2021

There are places where Amazon could be set up to win, proving its resilience in a tech rout and volatile macroeconomic climate.

For one, the Prime Day sales events in the last few months matter, and could result in boosted sales numbers online and for third-party sellers. The July Prime Day event was Amazon’s biggest ever in terms of the number of purchases, in which Prime members bought more than 300 million items globally. The company didn’t disclose the revenue figures from the event.

Amazon has guided to a 13% to 17% uptick in third-quarter sales, and analysts believe the company looks set to meet those numbers. Looking ahead, J.P. Morgan analyst Doug Anmuth also says Amazon’s retail business is poised to beat out competitors this holiday season.

An Amazon delivery worker checks packages in New York City, U.S., July 11, 2022. REUTERS/Brendan McDermid

An Amazon delivery worker checks packages in New York City, U.S., July 11, 2022. REUTERS/Brendan McDermid

An Amazon delivery worker checks packages in New York City, U.S., July 11, 2022. REUTERS/Brendan McDermid

“Retail top line concern is mostly driven by macro and how Amazon will hold up in a recessionary environment,” he wrote in an Oct. 26 note. “Near-term, we think higher in-stock levels and faster delivery speeds will be key drivers as Prime returns to normal, and we expect Amazon to have an inventory advantage this holiday season as omni-channel retailers may be more constrained by physical space.”

AWS could also be poised to report growth at or around 30%, as operating margins moderately compress. There’s reason for pause here, given that competitor Microsoft (MSFT) has seen its cloud sales growth slowing. But there’s still a lot of optimism for AWS. For instance, Raymond James analyst Aaron Kessler expects “continued leadership and momentum in cloud [and] AWS,” he wrote in an Oct. 25 note.

So, there could be good news for Amazon as it reports Q3 earnings. However, there’s no forgetting the extent to which this environment, from a hawkish Fed to the specter of a recession, has rattled Big Tech.

“White knuckle fears around 3Q earnings season and negative revisions have sent tech stocks into a tailspin lower,” Wedbush analyst Dan Ives wrote earlier this month. “Any positive news is negative news… in this market, and bad news is perceived as Armageddon and thus takes down tech stocks in a heartbeat.”

Big Tech’s rough week

It’s been a tough stretch for Big Tech — even before this week — and Amazon has been no exception. This week, we’ve seen the consequences of inflation’s squeeze on consumer spending. Google-owner Alphabet (GOOG, GOOGL) saw its shares drop after YouTube ad revenues came up short, while Meta’s (META) stock also slid after its earnings miss on Wednesday.

Amazon’s far from immune to the consumer slowdown. This month, the company’s second Prime event reportedly didn’t stack up, according to both CNBC and Fortune. This month, Bank of America analysts estimated that Amazon brought in $5.7 billion from October’s Prime Early Access Sale, a drop from the $7.5 billion it estimated Amazon’s July Prime event raked in.

Amazon shares are down about 29% year-to-date as of market close Wednesday.

Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks.

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