Amazon.com Inc (NASDAQ:AMZN) moved higher in early trading as investors awaited what is expected to be a solid set of Q2 results.
Shares were up 1.5% at $189.78 as Thursday's session got underway, with analysts tipping toward solid revenues, alongside the potential for profit margin expansion driven by strong online retail and AWS growth.
Previewing the retail giant’s Q2 earnings report after hours on Thursday, Bank of America estimates Amazon's quarterly revenue at $149 billion, slightly above Street expectations. The firm also projects a 1% higher operating profit at $14 billion.
Data suggests upside to 2Q retail estimates, analysts noted, highlighting accelerated growth in online spending based on aggregated credit and debit card data.
Amazon's AWS division is also expected to perform well, with an 18% year-over-year growth estimate, driven by increased consumption spend around model training and strong backlog growth.
Analysts see parallels with Google's cloud performance as a positive indicator for AWS.
Looking ahead to Q3, Bank of America anticipates a conservative profit guide from Amazon, a usual practice for the company, but still expects quarter-over-quarter margin expansion in non-investment years. “For revenues, there are some signs of consumer softening, but we think Amazon is gaining share,” analysts wrote.
Despite some concerns about higher freight costs and new fulfillment capacity, Bank of America remains optimistic about Amazon's positioning.
"Given expanding retail margins with support from Prime ad growth, and expected AWS acceleration, we think the stock is still set up for multiple expansion in 2024,” they concluded.
Bank of America has maintained its ‘Buy’ rating for Amazon and a price objective of $220.
Amazon is expected to release its 2Q financials on August 1.