To The Moon

$Amazon.com(AMZN)$ is scheduled to report after market close on Thursday, 01 May 2025.

Revenue: Wall Street consensus estimates range slightly but center around $144 billion to $155 billion. Some estimates lean towards the higher end (~$155B). This represents modest year-over-year growth (around 8-10%).

Earnings Per Share (EPS): Consensus estimates are around $0.98 to $1.37. The higher estimates represent significant YoY growth (potentially +39%), reflecting successful cost-cutting and efficiency initiatives.

It is important to remember that after Q4 2024, Amazon provided Q1 2025 revenue guidance of $151 billion to $155.5 billion, which was below market expectations at the time ($158.5B+). This cautious guidance cited a significant foreign exchange headwind (estimated $2.1 billion) and potential concerns about slower growth.

Amazon (AMZN) Last Positive Earnings Call Saw A Decline Of 20.87% In Share Price

Amazon had a positive earnings call on 06 Feb 2025 which saw its share price decline by 20.87% since.

Amazon's earnings call highlighted strong revenue and growth in AWS and advertising, with significant advancements in delivery and Prime membership benefits. However, challenges such as foreign exchange headwinds and AWS capacity constraints were noted, though their solutions are in progress.

Amazon (AMZN) Guidance

During the Amazon.com 4th Quarter 2024 financial results call, the company reported $187.8 billion in revenue, marking a 10% year-over-year growth. Amazon faced a $700 million foreign exchange headwind, which, without it, would have resulted in an 11% revenue increase. Operating income reached $21.2 billion, up 61% from the previous year, while trailing twelve-month free cash flow, adjusted for equipment finance leases, was $36.2 billion, a $700 million increase year-over-year. The North America segment grew 10% in revenue, while the international segment expanded by 9%, excluding foreign exchange impacts. Advertising revenue also saw an 18% year-over-year rise, totaling $17.3 billion for the quarter. AWS's annualized revenue run rate reached $115 billion, with a 19% growth year-over-year. Capital investments for the fourth quarter were $26.3 billion, with a similar rate expected for 2025.

The company's guidance for Q1 2025 anticipates net sales between $151 billion and $155.5 billion, with a potential $2.1 billion foreign exchange headwind and an additional $1.5 billion impact from the previous year's leap year.

Key Factors and Segments To Watch For Amazon (AMZN) Q1 2025 Earnings :

Amazon Web Services (AWS) Performance

Amazon reported $187.8 billion in revenue for Q4 2024, up 10% year over year, and operating income of $21.2 billion, up 61% year over year.

Growth Rate: This remains a critical focus. Expectations are for continued growth, but likely slower than competitors like Microsoft Azure and Google Cloud. Analysts predict growth rates in the low-to-mid teens (around 17-19% YoY), reaching roughly $26-27 billion in revenue for the quarter. This compares to 19% growth seen in Q4 2024.

AWS grew 19% year over year to a $115 billion annualized revenue run rate. This includes strong growth in generative AI and non-generative AI offerings.

Margins: AWS margins are crucial to Amazon's overall profitability (making up ~62% of operating profit in Q4 2024 despite only ~17% of revenue). Analysts will watch closely if margins hold up (around 37-38% seen recently) amidst heavy investment in AI infrastructure and competitive pricing pressure.

AI Impact: Commentary on the adoption and revenue generation from new AI capabilities within AWS will be highly scrutinized. Positive momentum here could offset concerns about slower overall cloud growth. AWS growth was moderated by supply constraints, including chip shortages and power limitations, though expected to ease by the second half of 2025.

Advertising Revenue:

Amazon's advertising revenue reached $17.3 billion in Q4, growing 18% year over year, resulting in a $69 billion annual revenue run rate.

Strength Expected: This high-margin business is expected to continue its strong performance. Analysts project growth rates of 16% to potentially 25% YoY, reaching $14-15 billion for the quarter. Growth is supported by platform engagement and tools like Prime Video ads.

E-commerce & Retail:

Amazon expanded same-day delivery sites by more than 60% in 2024, now serving over 140 metro areas, and delivered over 9 billion units the same or next day globally.

Consumer Spending: Investors will look for signs of stabilization or improvement in consumer spending patterns. Growth in Prime membership driven by enhanced benefits, including unlimited free shipping and exclusive events. A new benefit of fuel discounts was also introduced.

Efficiency Gains: Continued benefits from cost-cutting measures, improved logistics (faster delivery, lower cost-to-serve), and warehouse automation are expected to support North American profitability. International segment profitability will also be watched.

Tariff Impact: Uncertainty around US tariffs on Chinese goods is a significant overhang. Analysts are looking for commentary on how Amazon is mitigating potential impacts (e.g., passing costs to suppliers/consumers, shifting sourcing). Some estimates suggest tariffs could impact annual profit by $5-10 billion if fully implemented without mitigation.

Profitability and Capital Expenditures:

Amazon experienced a $700 million higher than expected foreign exchange headwind, impacting revenue growth, which could have been 11% year over year without it.

Operating Margins: Continued improvement in overall operating margins is a key expectation, driven by cost efficiencies and growth in high-margin segments (AWS, Ads). Estimates for Q1 operating income range from $13.5 billion to potentially over $18 billion.

Revenue guidance for Q1 2025 is impacted by the comping of last year's leap year, contributing approximately $1.5 billion of additional net sales in Q1 2024.

Capital Expenditures (CapEx): Amazon guided towards significantly higher CapEx in 2025 (potentially over $100 billion, up from ~$80B), largely driven by building out AWS capacity and AI infrastructure. How this heavy spending impacts near-term free cash flow and margins will be assessed.

Amazon (AMZN) Price Target

Based on 67 analysts from Tiger Brokers offering 12 month price targets for Amazon in the last 3 months. The average price target is $247.42 with a high forecast of $295.46 and a low forecast of $195.00. The average price target represents a 30.92% change from the last price of $188.99.

Generally analysts are optimistic about the long term, with a Strong Buy consensus rating. Many analysts maintained Buy ratings even after the cautious Q1 guidance given in February. Price targets mentioned range from $225 to $306.

However, there are near-term concerns regarding the impact of tariffs, foreign exchange rates, potential AWS growth deceleration compared to peers, and the impact of heavy AI investments on profitability.

Technical Analysis - Exponential Moving Average (EMA)

Amazon is setting a new uptrend but Amazon has earnings on Thursday so if Amazon can continue to maintain that upside movement to its earnings on Thursday (01 May), then we might get a nice new engulfing move above the 26-EMA and then 50-EMA.

But if the earnings come in bad, then we are going to see Amazon getting beaten down to maybe hitting a previous lows at around 168. But if the earnings are good we could have a new daily uptrend, and the bulls would be in a good control, but they need to clear the resistance range which stops at about 191, this is a big level which was from early 2024.

If we looked at the RSI, it is gaining momentum and i think Amazon is still fundamentally solid at current near 190 which AMZN has a 30 price to earnings and a 1.5 peg ratio.

One thing we need to consider is how Amazon has been growing its free cash flows and EPS.

Summary

The market expects Amazon to show continued progress in profitability driven by cost controls and high-margin segments like AWS and Advertising. However, top-line growth might be modest, and key focus areas will be the actual AWS growth rate and margins, commentary on AI adoption, the impact of tariffs, and guidance for Q2 2025. The actual results on 01 May will be crucial to confirm if Amazon is effectively navigating these opportunities and challenges.

Appreciate if you could share your thoughts in the comment section whether you think Amazon would be able to show continued progress in profitability despite challenges from the tariffs.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.