Investors will be paying close attention to Amazon’s cloud business growth and any updates to the company’s AI strategy on Thursday after the release of its third quarter earnings report.
Investor sentiment for Amazon is “mixed,” according to a report from Wedbush last week. In addition to AWS and AI, the company could also be facing retail margin pressure due to rising oil prices and is dealing with ongoing competition from Chinese companies such as Temu and TIkTok Shop, Wedbush said in its report.
The company’s stock has underperformed the larger market and other mega-cap tech names since its second quarter results.
Amazon has been in cost-cutting mode for much of the past year, including thousands of layoffs and tightening of its fulfillment network.
The company is also scrambling to demonstrate momentum in generative artificial intelligence in Amazon Web Services and across its business in recent months, seeking to counter the perception that it has fallen behind in the AI technology race.
Last month Amazon said it would invest up to $4 billion in Anthropic, the San Francisco-based artificial intelligence company founded two years ago by former OpenAI executives and considered one of the world’s top AI labs.
AWS revenue growth rates have dropped for three consecutive quarters, and fell to 12% in the second quarter. Amazon execs told investors after the second quarter earnings that the rate had stabilized and expressed optimism for more spend spurred by the generative AI fervor.
Amazon also continues to face regulatory challenges, with the pending outcome of the FTC lawsuit filed last month.
The company’s stock tanked a year ago after it gave lower than expected holiday guidance.
Some surveys and forecasts show that U.S. consumers plan to spend less on holiday shopping this year amid persistent inflation.
Analysts expect third quarter revenue of $141.5 billion and earnings per share of $0.58, compared to revenue of $127.1 billion and EPS of $0.28 in the year-ago quarter.
Earlier this week, Microsoft topped expectations for its quarterly results, with increased cloud revenue foreshadowing strong interest in its artificial intelligence products.
Alphabet, meanwhile, missed expectations for its cloud business.
Editor’s note: Analyst expectations for the third quarter were updated.
