Amazon (AMZN) Set to Release Q4 Earnings Amid Tech Sector Turmoil
Amazon is poised to release its quarterly financial results on Thursday after the market closes. This announcement follows mixed performances from its Big Tech peers, Microsoft (MSFT) and Google (GOOG), as well as industry-wide concerns surrounding the emergence of Chinese AI upstart DeepSeek.
Earnings Expectations for Amazon
Analysts predict that Amazon will post earnings per share (EPS) of $1.50 on revenue of $187.3 billion for Q4. These figures represent significant growth compared to the $1.00 EPS and $169.9 billion revenue reported in the same period last year.
AWS and Advertising Revenue Projections
Amazon Web Services (AWS), the world's largest cloud provider, is expected to drive revenue growth with an estimated $28.8 billion, up from $24.2 billion in Q4 2023. Additionally, the company's advertising revenue is anticipated to reach $17.3 billion, a notable increase from $14.6 billion in Q4 last year.
DeepSeek's Impact on Big Tech
The market has been closely monitoring the breakout success of DeepSeek's R1 model. This AI model, despite DeepSeek's limited resources, has raised concerns among investors regarding the competitive landscape in the tech sector.
Amazon, similar to Microsoft, has already integrated DeepSeek's AI model into its AI services platform. This move provides users with access to the latest AI software.
Growth in AI and Advertising
Amazon's executives have emphasized the significant revenue generated by their AI business within the AWS unit. The company estimates that AWS will exceed $105 billion in revenue for the year. Capex for AWS is also projected to surpass $14.5 billion for the quarter.
Analysts are also optimistic about Amazon's advertising operations. Prime Video's ad revenue is expected to increase by approximately 20%, reflecting the company's efforts to monetize its streaming platform.