Amazon is set to release its third-quarter earnings results, with analysts from LSEG expecting adjusted earnings per share of $1.96 and revenue of $202.31 billion. A key focus will be on Amazon Web Services (AWS), which is projected to generate $45.48 billion in revenue, reflecting a 38% growth compared to the previous quarter.
This would mark AWS's fifth consecutive quarter of revenue acceleration. CEO Andy Jassy indicated that the cloud capacity for next year is largely sold out, with significant commitments extending to 2028.
Investors will also be keen to hear about Amazon's capital expenditures, which have been ramped up to meet the increasing demand for AI computing power, with forecasts suggesting capex could exceed $280 billion in 2027. However, this aggressive spending has resulted in negative free cash flow, with estimates predicting an outflow of $9.9 billion for the current quarter.
Amazon has also been reducing its workforce, laying off over 57,000 employees since 2022, including recent cuts in its device software and services team. Additionally, Amazon has taken steps to block third-party AI agents from accessing its platform, while simultaneously enhancing its own AI shopping tools, such as the rebranded Alexa for Shopping, which has seen significant user growth.
Analysts from Deutsche Bank suggest that while Amazon is developing its own shopping agents, the competition from services like Meta's Muse and OpenAI's ChatGPT could pose risks to its digital advertising revenue