Amazon is expected to report revenue growth of 12% for the first quarter, continuing a trend of expansion in the low double digits for the fourth straight quarter. This would represent a slight acceleration from the previous year. The company’s earnings per share are anticipated to be 83 cents, with revenue hitting $142.5 billion. Analysts are closely watching key numbers such as Amazon Web Services, which is projected to bring in $24.5 billion in revenue, and advertising, expected to generate $11.7 billion in revenue.
Operational Changes and Cost Management
Under the leadership of CEO Andy Jassy, Amazon has been implementing more disciplined spending practices. The company has focused on growing profitable services like advertising, cloud computing, Prime memberships, and its third-party marketplace. By making adjustments to its fulfillment operations and engaging in cost-cutting measures, Amazon has experienced significant growth in earnings. Operating income is expected to reach $11.2 billion, reflecting a remarkable increase of over 130% from the previous year.
Amazon has undergone significant changes in its workforce, with over 27,000 employees being laid off since late 2022. Despite the layoffs bleeding into 2024, the company has seen a positive impact on its financial performance. Following a challenging period in 2021 and 2022, Amazon’s shares surged by 75% in the previous year. Year-to-date, the company has gained 19%, outperforming the Nasdaq Composite.
Analysts are expecting a 12% increase in Amazon Web Services revenue for the first quarter. This marks a slight deceleration from the previous quarter but a noticeable improvement from the same period in 2023. The demand for generative artificial intelligence technology is anticipated to boost AWS revenue. Additionally, advertising, a high-margin business, is projected to experience more than a 23% growth year over year, reaching $11.7 billion in revenue. Amazon’s ad business is expected to show strong growth in the first quarter, with the potential for continued expansion throughout 2024.
The market is watching to see if Amazon will follow in the footsteps of its tech peers by announcing its first-ever dividend. Companies like Google parent Alphabet and Meta have recently issued dividends alongside their quarterly results. Amazon finished 2023 with $73.4 billion in cash and equivalents, prompting speculation about the possibility of a dividend announcement. The company will provide further insights into its performance during a conference call with investors scheduled for 5:30 p.m. ET.
Amazon’s first-quarter earnings report is highly anticipated by analysts and investors alike. The company’s performance in key areas such as AWS and advertising will be closely scrutinized, along with any potential announcements regarding dividends. With a focus on revenue and earnings growth, Amazon continues to demonstrate its ability to adapt to changing market conditions and capitalize on emerging opportunities for expansion.