As we enter the peak of this earnings season, nearly a fifth of S&P 500 Index ($SPX) companies, including major players like Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), and Meta Platforms (NASDAQ:META), are poised to reveal their financial performance. In 2023, Amazon secured the position of the second-best performing FAANG stock, trailing only behind Meta with impressive gains of 81%. The upward trajectory continued into 2024, with the stock reaching its 52-week highs last Friday. Here’s a glimpse into what the markets anticipate from Amazon’s upcoming Q4 earnings and whether AMZN stock is set to achieve new highs after the earnings report.
Amazon Q4 Earnings Preview
Analysts predict a substantial 11.4% YoY increase in Amazon’s Q4 revenues, reaching a record high of $166.2 billion. Consensus estimates point towards a similar expansion rate in the upcoming quarters, with a projected overall revenue growth of 11.5% for 2024, slightly surpassing the expected growth for 2023.
In their Q3 earnings call, Amazon offered Q4 revenue guidance ranging from $160 billion to $167 billion, a figure that fell below the initial Street expectations. This guidance came despite Amazon exceeding its Q3 revenue projections and consensus estimates.
For Q4, analysts forecast per-share earnings of $0.81, marking a significant 285% increase compared to the same quarter in the previous year. Amazon achieved record net profits in Q3, nearly reaching the $10 billion milestone. The company’s Q3 operating margin of 7.8% was the highest since early 2021, attributed to various cost-cutting initiatives that bolstered profits amid a slowdown in revenue growth.
Key Points to Watch in Amazon’s Q4 Earnings Call
Consumer Sentiment: Amazon’s commentary on the health of U.S. consumers, especially during holiday shopping, will be closely observed in light of previous indications of consumers trading down amidst inflation and a challenging macro environment.
Business Spending: The growth of Amazon Web Services (AWS) has shown signs of stabilization but with YoY revenue growth hitting an all-time low of 12% in Q3. Observations on the business spending environment in 2024 will be crucial, given the deteriorating macro environment.
Cost Cuts and Operating Margins: Despite slowed sales growth, Amazon, along with other U.S. tech companies, reported robust profit growth in the previous year due to aggressive cost-cutting. Insights into further margin expansion through new cost-cutting initiatives may be discussed during the Q4 earnings call.
New AI Initiatives: Amazon’s potential AI plays may be unveiled during the earnings call, focusing on initiatives to enhance customer experience and productivity.
AMZN Stock Forecast Is Optimistic Ahead Of Earnings
Analysts express optimism regarding Amazon stock leading up to the earnings report. Jefferies recently raised its target price from $175 to $190, and Bank of America, listing Amazon as a top pick for 2024, believes the shares are well-positioned for the year. Various other brokerages, including JPMorgan, Piper Sandler, Evercore ISI, Citi, TD Cowen, and Bernstein, have also identified Amazon as a top pick for 2024.
With a “Strong Buy” rating from 41 out of 45 analysts covering the stock, Amazon stands as the best-rated FAANG stock. The mean target price of $182.37 is 14.5% higher than last week’s closing prices.
Prospects for Amazon Stock Post-Earnings
Amazon stock has consistently seen gains in the aftermath of earnings releases over the past three quarters. While historical performance is not a guarantee of future returns, the relatively subdued expectations for Q4 results could set the stage for a post-earnings surge, given the modest bar set by the markets. Furthermore, with Amazon shares still below their 2021 highs, long-term investors may find this FAANG stock to be a compelling buy.
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Author Faith Yakubu 
