Amazon's Q4 Earnings: Anticipated Growth Amidst AI Competition
Earnings Announcement and Market Outlook
Amazon (AMZN) prepares to release its quarterly financial results on Thursday after the closing bell. Market expectations remain cautiously optimistic, despite mixed performances from tech giants Microsoft (MSFT) and Google (GOOG, GOOGL) in cloud sales during their recent quarterly reports.
Key Metrics and Projections
Analysts predict Amazon to report earnings per share (EPS) of $1.50 for Q4, an increase from the $1.00 EPS in the same period last year. Revenue is estimated to reach $187.3 billion, surpassing the $169.9 billion reported in Q4 2023.
Amazon Web Services (AWS), a major contributor to the company's revenue, is anticipated to generate $28.8 billion, a notable rise from $24.2 billion in the previous year. Ad revenue is also expected to increase, rising to $17.3 billion from $14.6 billion in Q4 2023.
AI Competition and DeepSeek's Impact
Amazon, like Microsoft, has integrated DeepSeek's AI model into its service platform, providing access to advanced AI capabilities for users. Investors will be keen to hear how Amazon executives respond to the growing popularity of DeepSeek and its potential impact on the company's AI strategy.
Cloud Investment and Capital Expenditures
In an effort to meet growing demand, Amazon continues to invest heavily in its AI infrastructure. Capital expenditures for AWS are projected to exceed $14.5 billion for the quarter. The company's overall capital expenditures for 2024 are estimated to reach $75 billion, with even higher investments anticipated in 2025.
Advertising Growth
Amazon's advertising business is anticipated to continue its strong performance. Prime Video's ad monetization efforts are expected to drive ad revenue growth by nearly 20%, as per Bloomberg data, highlighting the company's efforts to diversify its revenue streams.