Amazon is scheduled to release its first-quarter earnings report after the market closes on Wednesday, drawing intense scrutiny from investors regarding its cloud division and AI spending.
Wall Street Expectations for Amazon's Q1 Performance
Financial analysts have compiled several key estimates for Amazon's upcoming earnings report. According to data compiled by LSEG, the market anticipates the following figures:
- Earnings Per Share (EPS): $1.64
- Total Revenue: $177.3 billion
Overall, revenue growth is projected to increase by 14% in the first quarter. This represents an acceleration compared to the previous year's 8.6% growth (which reached $155.7 billion) and aligns closely with the 13.6% growth seen in the last quarter.
Focus Areas: AWS and Advertising
Investors are paying particular attention to Amazon's major revenue streams, especially its cloud computing division:
- Amazon Web Services (AWS): Revenue is expected to reach $36.92 billion, projecting a significant year-over-year increase of approximately 26%. This follows a strong fourth quarter where AWS revenue expanded nearly 24%, surpassing analyst estimates and marking its fastest growth in three years.
- Advertising: StreetAccount estimates place advertising revenue at $16.87 billion.
Broader Tech Sector Context
Amazon's earnings release comes alongside reports from other major technology firms, including Microsoft, Alphabet, and Meta, all scheduled for Wednesday after the bell. This group will be providing Wall Street with updates on capital expenditures (capex) for the first time since the start of the U.S.-Iran conflict in February.
These tech giants are under pressure to justify their substantial spending on Artificial Intelligence (AI), with projected expenditures potentially approaching $700 billion by 2026.
Operational Headwinds and Spending Outlook
The geopolitical tensions have created tangible operational challenges for Amazon. These include:
- Supply Chain Disruptions: Resulting from global instability.
- Fuel Surcharges: Amazon implemented a 3.5% fuel surcharge for some third-party sellers due to soaring oil prices.
Looking ahead, Amazon previously projected its capital expenditures for 2026 to reach $200 billion, a substantial increase over the previous year and exceeding analyst expectations by more than $50 billion.
