Earnings Preview | What are the key points that Wall Street is focusing on for Amazon's Q2 earnings report?

According to the financial news app Zhitong Finance, Amazon (AMZN.US) will announce its financial performance for the second quarter of 2024 on August 1st. Wall Street analysts expect Amazon's Q2 revenue to be $148.6 billion, earnings per share to be $1.02; projected operating profit to be $13.7 billion, and adjusted EBITDA to be $32.1 billion. In addition, analysts predict that AWS's revenue will grow by 17.2% year-on-year to $25.9 billion, while advertising services revenue will increase by 21.1% year-on-year to $13 billion.

During the conference call after the financial report is released, traders may seek information on the expected financial impact of Amazon Prime Day held on July 11th to 12th, which will be included in the third-quarter performance.

Morgan Stanley believes that AWS revenue needs to grow by at least 18% year-on-year to demonstrate some growth momentum and establish AWS's position in investors' minds as a generative AI platform, as well as its ability to achieve high-speed growth during a period of significant capital expenditure investment.

Bank of America expects Amazon's Q2 earnings to exceed expectations, with the growth of new 3P (third-party sellers) fees and Prime advertising seen as profit drivers. The biggest risks to profit margin guidance are rising shipping costs and the tendency to launch new capacity before the third quarter holidays. In terms of valuation, analyst Justin Post and his team at BofA believe that considering Amazon's two-year GAAP EPS growth rate of 27%, a P/E ratio of 30.7 times the 2025 GAAP EPS is reasonable.

Wedbush Securities stated that they are focused on the performance of Amazon's retail business and the continued growth of market share. Analyst Dan Ives expects that with the transition to higher-margin businesses, accelerated growth of AWS, and the monetization of artificial intelligence, the company's operating profit margin will increase. Prior to Amazon's earnings release, the analyst set a target price of $225 for Amazon, demonstrating confidence in the company.

Jefferies remains optimistic about Amazon's financial report. Analyst Brent Thill focuses on EBITDA. He pointed out, "The market generally believes that EBITDA will exceed the median expectation by 14%, far below the average level of 74% since the fourth quarter of 2020, and comparable to the lowest level since the third quarter of 2021." He reminded investors that Amazon's EBITDA guidance is usually conservative, "the positive mix effect brought by faster growth and higher profit margins from AWS and advertising, as well as continued growth in e-commerce fulfillment optimization, should allow Amazon to expand its 'harvest' model."

Amazon is one of the most popular large-cap stocks in the US stock market. Out of 61 analysts who have given ratings, 59 analysts have ratings equivalent to "buy" or higher. Amazon's earnings per share have exceeded expectations for five consecutive quarters, outperforming the market's average expectations by 35%; the company's revenue has also exceeded expectations for five consecutive quarters, outperforming the market's average expectations by 2.2%. The options market implies that Amazon's stock price will rise by 7% after the financial report is releasedIt is worth mentioning that Amazon's performance is closely related to many retail stocks. In the week following Amazon's earnings release, the stocks most closely related to the company were Costco (COST.US), Walmart (WMT.US), MercadoLibre (MELI.US), Maplebear (CART.US), and Wayfair (W.US). Target (TGT.US) and Dollar General (DG.US) had a negative correlation with Amazon after the earnings report.

Another important stock to watch is Rivian (RIVN.US), in which Amazon holds a 17% stake. Amazon currently has 15,000 electric delivery vehicles and plans to reach 100,000 by 2030. Since Amazon's last earnings report, Rivian has announced a partnership with Volkswagen