Amazon’s cloud computing business Amazon Web Services (AWS) will capture the Street’s attention when the eCommerce giant posts its first quarter earnings after the closing bell in New York on Thursday.
CEO Andy Jassy recently warned of short-term headwinds for the AWS segment, a key driver of the company’s profits, as firms curb spending in the current challenging macroeconomic conditions.
For the first quarter, AWS' revenue growth is expected to be flat sequentially and show 15% growth year-over-year, noted Markets.com chief market analyst Neil Wilson.
“This might be the low point in terms of expectations for AWS,” Wilson said.
For the AWS segment, the company posted revenue of $18.4 billion, a 37% jump year-over-year, in the first quarter of 2022.
For the most recent quarter, 4Q 2022, AWS revenue growth declined to a 20% increase year-over-year with sales of $21.4 billion.
Turning to the wider company, analysts, on average, expect Amazon to report earnings per share of $0.20 on revenue of $125.5 billion for 1Q.
Amazon has guided for revenue of between $121 billion and $126 billion, including an anticipated 210 basis point hit from unfavorable foreign exchange rates. This represents growth of between 4% and 8% on its revenue of $116.4 billion in the first quarter of 2022.
It expects to report operating income of between $0 and $4 billion, compared to operating income of $3.7 billion in the year-ago quarter.
The impact of Amazon’s recent cost-cutting measures will also be a focal point for investors. Among its initiative have been headcount reductions totalling 27,000, including in its Twitch streaming division and its Whole Foods supermarket chain.
Contact the author at emily.jarvie@proactiveinvestors.com
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