TLDR
- Amazon reports Q3 earnings Thursday after the close, with analysts expecting about $202 billion in revenue, up 12%.
- AWS is the focus, with sales forecast to grow about 37% to roughly $45 billion.
- Amazon projects about $220 billion in capex this year, up from $132 billion in 2025.
- Anthropic’s IPO prospectus mentioned Amazon and AWS 166 times, putting its $110 billion AWS contract in focus.
- Morgan Stanley raised its price target to $350 from $335 and named Amazon a top pick.
Amazon (AMZN) stock was up 0.59% on Thursday as investors waited for the company’s third-quarter report. The stock has been in a rut lately, and the market cap sits at about $2.7 trillion. Results are due after the closing bell.
Wall Street expects revenue of $202 billion, a 12% rise from a year ago. Earnings per share estimates range from $1.97 to $2.01, against $1.95 last year.
That year-ago number was hit by $4.3 billion in one-time charges. They covered severance costs and a settlement with the U.S. Federal Trade Commission. Gains or losses on Amazon’s stakes in OpenAI and Anthropic could also move the figure this quarter.
Retail growth is expected to cool. Prime Day moved into the second quarter this year to avoid a clash with the FIFA World Cup in July. Retail sales grew 15% last quarter, and analysts see just 5% this time.
Ad revenue will also feel the shift. The second quarter was unusually strong, which makes the comparison tougher. Taken together, the two quarters should still show growth near 10%.
AWS in the Spotlight
Most of the attention will go to Amazon Web Services. Sales growth has sped up for five straight quarters. Analysts expect AWS revenue to rise about 37% to roughly $45 billion.
Last quarter, AWS revenue grew 37%, its fastest pace in 18 quarters. The unit is also expected to post a 38% operating margin, up from 35% a year ago. That would mean about $17 billion in operating income, roughly two-thirds of the company total.
AWS Chief Financial Officer John Felton said earlier this month that AI spending is paying off. AWS also became the first cloud provider to win NATO-wide approval to handle the alliance’s restricted workloads. Microsoft Azure is still narrowing the gap as the number two player.
The Spending Question
Costs are what have investors on edge. Amazon spent $132 billion on capex last year and has projected about $220 billion for this year. That leaves about $120 billion for the second half.
Capex has topped Amazon’s record operating cash flow for the past two quarters. Analysts expect that to continue through next year. Amazon also added $78 billion in debt in the nine months to June, plus about $30 billion in the third quarter.
Unlike Alphabet and Meta Platforms, Amazon has not sold equity. Depreciation costs are rising with the buildout, but the AWS margin has held up so far.
On Monday, Anthropic filed its IPO prospectus, which named Amazon and AWS 166 times. Anthropic’s AWS contract is worth $110 billion over 10 years. Amazon is a competitor, distributor, customer and vendor to the startup, and will hold more than 5% after the IPO.
On the analyst side, Morgan Stanley lifted its Amazon price target to $350 from $335 and made it a top pick. Results that match or beat estimates could push the market value higher. The report lands Thursday after the close.
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