Amazon.com Inc. shares surged after its last earnings report due to blistering cloud growth, but more than half those gains have since evaporated. The company now needs a repeat performance from Amazon Web Services (AWS) to reignite its faltering stock. The stock had its best day since 2012 on July 31 after second-quarter results showed AWS revenue accelerating faster than expected. However, shares have struggled since, down 10% from an early August record due to jitters about the AI trade, higher interest rates, and competition from AI services like Meta Platforms Inc.’s Muse.
Shareholders are looking for AWS to deliver similar results when Amazon reports earnings after the bell on Thursday. Analysts expect the segment to post an almost 40% jump in quarterly revenue to $45.7 billion. Amazon’s report comes during a packed week for hyperscaler results, with investors focused on tangible payoffs from heavy AI infrastructure spending. Microsoft Corp. and Alphabet Inc. reported lower-than-expected capital expenditures, with Microsoft’s stock jumping on better-than-anticipated cloud revenue, while Alphabet tumbled as profits and sales missed estimates.
Wall Street expects revenue to climb 12% to $202 billion and net income to rise 2% to nearly $22 billion. Beyond AWS’s performance, investors will closely watch capital expenditures. Amazon raised its capex forecast last quarter, and analysts expect further increases, with estimates rising to $222 billion for 2026 and nearly $290 billion for 2027. The rosy reaction to Anthropic PBC’s IPO filing could also benefit Amazon, as its stake in the AI lab has boosted profits. Each $1 trillion of Anthropic’s market capitalization could add about 7% to Amazon’s market value, currently at $2.7 trillion.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing