Amazon’s Turn to Either Stand Out or Disappoint

Today, the market waits with bated breath for Amazon’s much-anticipated Q4 earnings, set to be released after the closing bell. So far, this earnings season has been a mixed bag for Big Tech, with the industry still reeling from the emergence of DeepSeek.

Cloud rivals Microsoft and Google both disappointed investors by missing cloud sales expectations for the quarter. Microsoft reported cloud revenue of $40 billion, falling short of the Street’s expectation of $41.1 billion, while Alphabet posted cloud sales of $11.9 billion, missing the anticipated $12.1 billion.

Both companies cited a lack of capacity to meet the growing demand for cloud and AI services as the reason for their shortfalls. The market reacted swiftly Microsoft’s stock opened 6% lower the following morning, while Alphabet’s stock fell 7% after its earnings announcement.

As the largest cloud provider in the world, Amazon is in the spotlight. Like its rivals, Amazon is investing heavily in expanding its AI infrastructure. In the previous quarter, Amazon’s CEO informed shareholders that the company planned to spend $75 billion on capital expenditures in 2024, with an even greater investment expected in 2025.

For Q4, Amazon’s earnings per share (EPS) is projected at $1.50, with revenue expected to reach $187.3 billion. Amazon Web Services (AWS) is forecasted to report $28.8 billion in revenue, while its ad revenue is projected at $17.3 billion.

Beyond the numbers, the market is eager to hear Amazon executives address the elephant in the room DeepSeek’s breakout success. The tech industry is still recovering from the shock of last week’s announcement, which sent investors into a frenzy. Many are questioning how a Chinese startup was able to develop and release a powerful AI model at a fraction of the cost that industry giants like Microsoft, Amazon, Nvidia, and Alphabet are spending.

Regardless of what Amazon’s executives say, the true test will be in the numbers. Friday morning could prove to be a pivotal moment will Amazon rise above expectations or follow its rivals into post-earnings disappointment?

By James Trescothick

Head of Market Research and Market Analysis

Sources: Yahoo Finance and Bloomberg Data

Risk Disclaimer: This information is for educational purposes only and does not constitute investment advice. Financial markets involve risks, and past performance is not indicative of future results. Always conduct your own research and seek professional advice before making investment decisions.

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