Amazon Q1 Preview: Focus on AWS Growth and Generative AI

Amazon.com (NASDAQ: AMZN) is due to release its first quarter results on Tuesday, and investors are watching Amazon Web Services (AWS) sales growth, explanations of AI-related demand, and the e-commerce giant's outlook for this year.

Wall Street expects the Seattle-based company's EPS to be $0.83 and sales to be $142.56 billion, which is during the quarter11.9% increaseIt means.

Amazon's advantage in the e-commerce market protects Amazon from a tough economy and provides a competitive advantage over other platforms because consumers continue to use Amazon services for online purchases. At the beginning of February, Amazon was driven by generative AI functions that contributed to promoting growth in e-commerce and cloud businesses, and surpassed analysts' expectations during an important holiday quarter.

The company, which also enjoys a position as one of the leading cloud providers, believes that generative AI “will eventually bring tens of billions of dollars in revenue to Amazon over the next few years.”

The stock has risen 18% so far this year, surpassing the nearly 7% rise in the broader S&P 500 index.

BofA analyst Justin Post said retail and profit margins are likely to rise during the first quarter due to continued market share growth and the introduction of Prime Video ads.

Seeking Alpha analysts and Wall Street are bullish and evaluate the same stock as “buy” or more, but they view the same stock as “hold” in Seeking Alpha's quantum evaluation.

In particular, investors will also pay attention to capital expenditure for the same quarter in response to the company's announcement that it expects capital investment in 2024 to increase compared to the previous year due to infrastructure enhancements and additional investments in generative AI etc. to support the growth of AWS.

Wedbush is forecasting Amazon's first quarter operating profit of 11.6 billion dollars.Exceeded consensus by approximately 5%What was the growth in advertising revenue in the first quarter+24.5% year-on-yearI anticipate that.

Wedbush analyst Scott David stated that “the growth of AWS in the same period last year should benefit in the first quarter and 2024 by easing rewards, easing pressure due to cost optimization, resuming migration/new transactions, and new monetization of generative AI solutions,” and added that securities companies anticipate the following. AWS's revenue for the first quarter was $24.6 billion (+15.0% year over year), which is consistent with consensus, and suggests an acceleration from +13.2% year over year in the fourth quarter.

However, Seeking Alpha analyst Dan Victor pointed out that due to rising oil and fuel prices, fulfillment costs will increase, and the company's operating margins may face headwinds.

Also, attention is being paid to whether Amazon will announce dividends at the same time as the first quarter financial results.

Over the past 3 months, EPS forecasts have been revised upward 24 times, with no downward revisions, while earnings forecasts have been revised upward 23 times and downward revisions have been made 9 times.