Amazon is expected to report quarterly results after the bell on Tuesday, continuing a wave of Big Tech results that have so far wowed Wall Street but also warned of some impatience with heavy AI spending. The company is expected to offer updates on the progress of its AI development, the status of its lucrative cloud computing business and the growth of its advertising segment.
Amazon’s report will come a week after cloud rival and AI competitor Microsoft (MSFT) posted an impressive quarter, beating expectations thanks to the strength of its cloud computing business. The market applauded even louder the results of Google parent company Alphabet (GOOG, GOOGL), which outperformed in terms of revenue and net income and were accompanied by the announcement of a new dividend , the latest in a trend among tech giants.
Here’s what Wall Street expects for some of Amazon’s most important metrics in the company’s fiscal fourth quarter:
-
Revenue: $142.6 billion expected ($127.4 billion in Q1 2023)
-
Adjusted earnings per share: $0.82 expected ($0.31 in Q1 2023)
-
Online stores: $54.8 billion expected ($51.1 billion in first quarter 2023)
-
Amazon Web Services: $24.1 billion expected ($21.4 billion in Q1 2023)
-
Advertising: $11.8 billion expected ($9.5 billion in the first quarter of 2023)
Amazon sees the potential for AI initiatives to generate tens of billions of dollars for its cloud business. CEO Andy Jassy said in an annual letter to shareholders earlier this month, “Generative AI could be the biggest technological transformation since the cloud (which itself is still in its infancy), and perhaps since the Internet.”
Amazon, which has positioned itself as a leader in AI, is another player in the race to capture market share and launch new consumer services. In March, Amazon increased its investment in AI startup Anthropic, injecting an additional $2.75 billion to bring its total investment to $4 billion.
Like its competitors Microsoft and Alphabet, Amazon is wielding its influence in its cloud computing business to gain an advantage in the burgeoning AI market. AI tools require enormous amounts of data and processing power to train and run large language models and their applications, relying on cloud providers to provide vital infrastructure.
Similar to other deals between tech giants and AI-focused companies, Amazon’s partnership with Anthropic comes with a commitment to using its cloud computing services, highlighting the benefit of billion-dollar companies as they attempt to dominate the coming era of AI.
Amazon is the largest player in the cloud industry. Amazon Web Services claims around 30% market share, followed by Microsoft Azure and Google Cloud. The trio collectively represents about two-thirds of the market.
In September, Amazon launched its AI service, called Amazon Bedrock, allowing customers to build generative AI applications through existing models offered by Anthropic, Stability AI and Amazon itself.
But Amazon’s commitment to AI advancements has also come against a backdrop of downsizing.
Amazon said earlier this month…
