Amazon.com Inc (NASDAQ:AMZN) is set to report solid third quarter results led by continued retail strength and improving sentiment around its cloud business, according to Bank of America analysts.
The firm estimates revenue of $179 billion and operating income of $20.4 billion, both above consensus forecasts of $178 billion and $19.7 billion, respectively.
Amazon Web Services revenue is projected to grow 17.7% year over year to $32.3 billion, roughly in line with Street expectations.
“Given healthy retail sales, strength in Online advertising, and July AWS layoffs, we see potential for operating income upside and are 4% above Street for GAAP operating profit,” the analysts noted.
Bank of America’s proprietary credit and debit card data suggests Amazon’s North America retail business is tracking ahead of expectations.
The analysts noted that online spend growth accelerated in Q3, and third-party data could suggest Amazon is tracking 1% to 2% above Street estimates.
For the fourth quarter, the firm anticipates revenue guidance of $202 billion to $209 billion and operating income of $18 billion to $22 billion, both slightly below consensus midpoints.
“We expect North America eCommerce strength to continue while AWS could modestly accelerate,” the analysts wrote, adding that Amazon typically beats its guidance ranges.
Bank of America also noted that investor sentiment around AWS remains cautious but could improve heading into 2026.
“We are looking for a positive tone on 2026 AWS growth,” they wrote, citing factors such as ramping Project Rainier capacity, faster backlog growth, and the potential for Amazon to highlight new AI-related infrastructure at its December re:Invent conference.
The bank’s analysts maintained a ‘Buy’ rating and $272 price target.
They noted investor concerns about AWS AI positioning, but believe its valuation remains attractive relative to peers.
- Updated with share price movement -