Shares in Amazon com Inc(NASDAQ:AMZN) ticked higher in afternoon deals ahead of first quarter results, due after the bell, as the online group continues on its journey to be one of the world's largest retailers.
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Shares ticked 1.18% higher in New York to stand at $920.14.
The question for many analysts will be how will margins be affected by the continued investment to grow the group.
Substantial earnings growth expected....
"We expect Amazon to continue delivering substantial earnings growth, tempered by spending on new initiatives," said broker Wedbush this week, which has repeated an 'outperform' rating.
The broker has also bullishly raised the price target to $1,250 - a fair distance from where the shares are now.
Analyst Michael Pachter said expect first quarter revenue to be at or above the high end of guidance. He forecasts $35.97 billion, compared to consensus of $35.30 billion and guidance of between $33.25bn and 35.75 billion.
Sales will be driven by strong growth of Prime memberships, solid sales of Amazon-branded products, and AWS (Amazon Web Services) growth, he suggests.
Meanwhile, spending on film and TV content appears to have accelerated, as well as investment in additional fulfilment centers, fresh food, AWS products and features, he adds.
Wedbush expects 2018 revenue to top $207bn...
Pachter expects 2018 revenue of $207bn, operating income of $8.2 billion, and EPS (earnings per share) of $10.73, he adds.
Amazon Web Services (AWS) should be the engine of growth, says Wedbush, with its operating margins expanding rapidly, but this Amazon business has been the subject of some concern among some analysts due to the recent disappointing revenue last quarter.
AWS is the market leader in the public cloud but Amazon has recently had to make price cuts to stay competitive against similar services offered by tech giants, Microsoft, Alphabet and IBM.
Revenue for the division last quarter rose 47% to $3.5 billion, compared to 55% in the third quarter and 58% in the quarter before that.
It's a huge day for big cap earnings amid a slew of quarterlies all round and Google parent Alphabet Inc (NYSE:GOOGL), the tech giant with a $600bn market cap, is also reporting after the bell. Its shares are nudging 0.04% lower to $888.79 currently.
Alphabet quarter to be "in line"?
Wedbush expects its first quarter to be "in line" with "some risk to profitability", given ad mix shifts, search device mix shifts, and the push into hardware.
The broker reckons its initiatives into smart phones and cloud services will deliver increasing share of group revenue, but blur visibility into its core ad growth trends.
It is worth noting that advertising made up a huge 88% of GOOGL's revenue in 2016.
Wedbush rates Alphabet as 'underperform'.
It expects earnings per share (EPS) of $7.29 versus Wall Street consensus for $7.41 per share.