Amazon.com Inc. is set to release its fiscal second-quarter results on Thursday, which will serve as a significant indicator of the current state of the economy and technology. As an e-commerce giant, Amazon’s performance will offer insights into consumer behavior, particularly online shopping, which has shown more growth than traditional retail.
In addition, market attention will be focused on Amazon Web Services (AWS) and whether its growth will pick up pace as the market leader. Last week, Microsoft Corp. announced that its own cloud services growth would slow down in the current quarter. On the other hand, Alphabet Inc.’s Google Cloud saw a 28% increase in revenue, exceeding expectations.
UBS analyst Lloyd Walmsley cautioned that the deceleration experienced by Microsoft’s Azure platform in the third quarter could potentially be indicative of a similar trend for AWS. However, it is worth noting that AWS started optimizing its services later than its competitors.
Amazon divides its revenue into three segments: North America, International, and AWS. While AWS accounted for 14.5% of total sales last quarter, it has been responsible for driving the company’s overall growth.
Analysts are expecting mixed results from Amazon. Michael Pachter from Wedbush Securities anticipates positive performance in the advertising, online stores, and subscriptions segments, but predicts that AWS might remain relatively flat. Brian White from Monness Crespi Hardt highlights both positive and negative factors for Amazon, including the benefits of digital transformation, artificial intelligence, new healthcare opportunities, and improved cost structures. However, he also warns of the potential impact of regulatory actions and economic uncertainty. Specifically, there are concerns that the Federal Trade Commission may bring an antitrust suit against Amazon regarding its online marketplace.
As investors await Amazon’s fiscal second-quarter results, all eyes will be on the company’s performance in relation to consumer buying behavior and the growth of AWS as the market leader in cloud services.
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