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“Recent layoffs signal to us that AMZN is committed to ‘Harvest Mode’ as they continue to optimize the cost structure,” Jefferies analyst Brent Thill wrote recently. Access our top stock picks, proprietary research reports, stock screeners and more. “We model 13% growth in AWS in 4Q and believe the Street expectation https://traderoom.info/ is in the 12.5% to 13.0% range, based on our conversations,” JPMorgan said. If Nvidia were just a chip company, it wouldn’t be this powerful, but Nvidia is a software company first. The key to Nvidia’s market dominance remains its CUDA software, seen as an essential building block to AI applications.
Yet while the margin progress stands out, Piper Sandler analyst Thomas Champion noted that about 70% of investor questions that he gets are about the cloud. Analysts at Bloomberg Intelligence said building sales momentum should help the e-commerce giant to Wall Street estimates when it reports earnings results. “Lapping cost optimization and AI-driven demand are key drivers for AWS; we think it [is] important for management to call out potential for first-quarter acceleration on the call,” Bank of America said. Nvidia is bringing its most powerful chips, the Grace Hopper line, to the party. It’s not forgetting the gamers who helped drive its graphics dominance a decade ago, either.
- AI is the catalyst for innovation across major industries.
- With this backdrop, let’s look at what other Wall Street analysts are saying about AMZN stock.
- The company also provided an operating income guidance of $5.5 billion to $8.5 billion, which potentially triples the $2.5 billion earned in last year’s third quarter.
- They’re either accepting the cost of Nvidia upgrades or looking for cheaper substitutes.
- BofA Securities analyst Justin Post added that he expects fourth-quarter retail margins to come in at 3.8% for the fourth quarter, which would mark a sequential contraction of just over 1 percentage point.
In North America, it reported an operating income of $3.2 billion, up from an operating loss of $627 million, while it narrowed its international operating loss from $1.8 billion to $895 million. Its advertising business, which is included in those segments, also delivered strong growth, with revenue up 22% year over year to $10.7 billion. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. Management has predicted December quarter sales of between $160 billion and $167 billion, up 7% to 12% from a year earlier, with operating income of between $7 billion and $11 billion. Consensus expectations among analysts tracked by FactSet are for revenue of $166.2 billion, profits of 79 cents a share, and $10.3 billion in operating income.
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This is likely a factor of attrition at its warehouses as well as layoffs among corporate staff. Therefore, let’s delve into AMZN’s initiatives aimed at driving profitability and strengthening its position in the AI space. Joe Terranova, senior managing director at Virtus Investment Partners, joins CNBC’s “Halftime Report” to explain why he’s willing to pay a premium for Microsoft, Google, and other mega-cap tech. You have already added five stocks to your watchlist. Upgrade to MarketBeat All Access to add more stocks to your watchlist.
Does Amazon Usually Go Up After Earnings?
A few of the products the company does manufacture are the Kindle and Fire Tablets, Fire TVs, and smart home devices like Echo. Echo is powered by an AI personality named Alexa which can take vocal commands from its users. “Retail margins have improved significantly, and we still think Street [operating income] looks conservative into [2024] on incremental numbers,” Champion wrote. BofA Securities analyst Justin Post added that he expects fourth-quarter retail margins to come in at 3.8% for the fourth quarter, which would mark a sequential contraction of just over 1 percentage point.
Quarterly operating income is expected to have risen 280% in the holiday period
With this backdrop, let’s look at what other Wall Street analysts are saying about AMZN stock. Dryden Pence, chief investment officer with Pence Capital Management, joins ‘Power Lunch’ to discuss his market, economic expectations, atfx review and stock picks. Champion sees beatable Wall Street targets for Pinterest moving to 2024. Plus, he’s upbeat about the company’s ability to drive incremental margin improvements, with estimates there also appearing conservative.
Of course (and as always), bear in mind that something dramatic could change in the meantime, and no stock moves from one price to another in a straight line. Whatever the case, market research outfit IMARC indicates the North American logistics market is worth roughly $1.4 trillion per year but will be worth more than $1.6 trillion by 2028. Jassy also announced plans to lay off roughly 27,000 corporate employees early in the year, and the company’s headcount fell for the third quarter in a row, down 4% to 1.46 billion.
For the March quarter, the consensus calls for sales of $142.3 billion, up 11.7%, with profits of 69 cents a share, operating income of $8.8 billion, and AWS revenue of $24.7 billion, up 15.7%. Along with shuttering businesses and scaling down experiments, the company eliminated 27,000 corporate roles. These moves are intended to drive revenue, operating income, and free cash flows in the long term and enhance AMZN’s return on invested capital. Management said on the earnings call that macroeconomic challenges were easing, but it still sees shoppers focusing on value. With the macro climate improving, the ad business remaining strong, and profitability expanding, the e-commerce division also looks set to drive the stock higher over the coming months. In the second quarter, AWS generated $5.4 billion in operating income or more than two-thirds of the total.
While the margin number typically drops sequentially in the fourth quarter, Post anticipates that it will be up 4 points on a year-over-year basis. The second-quarter result shows those efforts are already starting to bear fruit, and profit margins should expand as the economy improves and management scrutinizes its costs further. Apple’s (AAPL) 1Q adjusted EPS is estimated at $2.09 and revenue is estimated at $117.62B. Jamie Meyers previews Apple’s earnings which will be reported this afternoon. Meanwhile, full-year EPS growth is expected to log a big positive swing to $2.70, whereas the company lost 27 cents a share during 2022. But CUDA is a moving target and the market isn’t going to wait for laggards.
It’s the old story that the leader gets 90% of the profit, the second-place company 9%, and everyone else fights for what’s left. Intel’s forward guidance was bad enough to send the stock down over 10% in less than an hour. Nvidia’s cloud market, in short, has legs, which bodes well for NVDA stock. The point is that there’s a vast cloud market beyond the Cloud Czars. That’s why all investing has some element of risk; we never know for sure what awaits stocks or their underlying companies.
This “private cloud market” was worth $12.8 trillion in 2022, growing at over 20% per year, and should be worth over $28 trillion in 2028. These companies aren’t big enough to create their own hardware, like the Cloud Czars. They’re either accepting the cost of Nvidia upgrades or looking for cheaper substitutes. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. The company is not a true retailer nor a pure-play manufacturer but in the business of connecting consumers and merchants together. The website was first created as a means of selling books at a discount but it has since grown to include most verticals in the retail sector.
Analyst Forecast
But what will the stock arguably be worth five years from now? To get a handle on that, you have to take a step back and figure out what’s working for and against the company, and how those things might change between now and then. Nevertheless, it is possible to use historical data and current information to figure out where a company is likely to be at some point in the future.