Amazon.com Inc (NASDAQ:AMZN) should deliver a slight earnings beat driven when it hands down its fourth-quarter report after Thursday's closing bell, analysts at Jefferies believe.
Wall Street analysts, on average, expect the eCommerce giant to deliver earnings per share of $1.48 on revenue of $187.23 billion.
Jefferies believes Amazon’s valuation remains “reasonable” despite its strong performance since its third-quarter earnings, with the shares up 26% compared to a 17% gain for Alphabet and 14% for Meta at the time of writing.
“Topline fundamentals are encouraging with generally healthier consumer spend, accelerating AWS momentum, and improving ad business,” analysts wrote in a note to clients.
“Continued eCommerce efficiency gains should provide margin support in Q4 and through the 2025 fiscal year.”
Analysts added that multiple data points indicate solid holiday online shopping during the quarter. “Consumers remain resilient in spend, while still looking for value,” they wrote.
For AWS, they noted higher spending intentions in 2025, the expected migration of more workloads to its cloud business in the next two years, and improved AI capabilities driving momentum in this segment.
Analysts expect continued improvement in operating margins in Q4 and fiscal 2025.
“Retail margins should benefit from a somewhat healthier consumer, further logistics regionalization efforts, more same-day facilities, and robotics/automation,” they wrote.
“On AWS, we don't expect margins to sustain at the record 38% levels hit in Q1 & Q3, though we see a modest annual 100 basis point expansion in fiscal year 2025 to 37.2% thanks to scale, partly offset by AI investments.”
The analysts have set a $275 price target for Amazon. Shares traded hands at about $237.40 late morning on Thursday.
“We see momentum continuing in 2025. Amazon remains a top pick for enterprise AI,” Jefferies concluded.
- Updated with share price movement -