Amazon.com, Inc. (NASDAQ: AMZN) is facing heightened scrutiny as it prepares for its much-anticipated Q4 2023 earnings report set to be released on February 6, 2024. The e-commerce giant has enjoyed significant stock performance throughout 2024, with its share price surging by 44%. Yet, as the earnings date approaches, market analysts are sounding alarms about the slowdown of growth within Amazon's core retail and cloud services sectors.
The economic outlook for Amazon's Q4 2023 performance suggests potential growth obstacles, particularly as expectations for increases across its retail and cloud segments start to wane. According to Bloomberg reports, analysts project Amazon's revenues to grow by 10.2% year-over-year, amounting to estimated total revenues of $187.3 billion. More impressively, earnings per share (EPS) are expected to soar by 50%, reaching approximately $1.5.
Despite these positive figures, Amazon has missed revenue expectations six times and surpassed EPS estimates only five times across the last 19 quarters, raising concerns about whether the firm's recent stock gains can be sustained following the upcoming financial disclosures.
Built on solid foundational growth, Amazon's stock value has steadily risen, particularly after its previous earnings announcement at the end of October 2024, which was well-received by investors. Notably, the 7-9月期 reported retail revenue increased by 8.2% compared to the previous year, totalling $104.5 billion. This positive momentum also extended to Amazon Web Services (AWS), which experienced growth of 19.1% during the same period.
Analysts predict, though, challenges may arise with the slowing of retail growth, as the forecast for Q4 reflects merely a 7.4% year-over-year increase compared to previous earnings results. AWS's growth is also expected to stabilize at 19.1%. The looming question is whether the previous strong growth can be replicated or if investor expectations will only lead to frustration.
Compounding these concerns is the sizable increase expected for Amazon’s capital expenditures. The company has estimated its capital investments for 2024 at around $75 billion, marking over 50% growth from previous levels. This significant investment is primarily attributed to Amazon's push for advancements and developments within its artificial intelligence (AI) services. Analysts are troubled by the prospect of continued high capital spending potentially pressuring earnings stability.
Despite these mixed forecasts, Amazon's stock remains attractive to investors. The average target price from analysts currently hovers around $250—approximately 6% higher than where the shares trade presently. A noteworthy consensus among 84 analysts reveals 79 hold buy recommendations, four maintain “hold”, and just one recommends sell.
The pressures from competitors, particularly seen through Microsoft’s cloud unit, Azure, which reported underwhelming guidance on growth, may influence investor sentiment. Comparisons drawn between Amazon’s AWS performance against Azure have emerged as pivotal for investors assessing future growth trajectories.
Recently, Amazon has also found itself entangled in another class-action lawsuit concerning the unauthorized collection and monetization of consumer data via its Amazon Ads SDK, exacerbated by privacy concerns. This lawsuit poses additional risks as the tech firm prepares for its looming earnings report.
While Amazon continues to charm the market with its innovations and revenue strategies, the pressure from upcoming earnings becomes evident. Only time will tell how the combination of market dynamics and investor expectations will shape the post-earnings assessment of Amazon’s stock performance. The financial community will undoubtedly be keeping a close eye on how Amazon manages anticipated challenges with its growth narratives to keep shareholder confidence intact.