Wall Street Bullish on Amazon Earnings Despite Consumer Spending Worries and Rising Investment Costs

Wall Street analysts generally expect Amazon to outperform expectations when it reports quarterly results on Thursday.

Analysts note that Amazon’s expanding cloud platform growth is a major bullish driver.

However, slowing consumer spending and the company’s investments in other areas may pose potential headwinds.

Wall Street anticipates Amazon to deliver strong quarterly financial results after the closing bell on Thursday, though concerns remain over how the company will navigate the slowdown in consumer spending.

Most analysts predict solid earnings with additional upside for Amazon’s stock, driven by strong performance in its cloud platform and advertising. However, some are cautious about declining retail margins and rising investments in other areas of Amazon’s business.

These investments include Project Kuiper, Amazon's initiative to deploy thousands of satellites for a larger broadband network, as well as investments in AI.

Here’s what analysts are saying ahead of Amazon's earnings:

CFRA: Searching for Investment Balance

CFRA views Amazon as an attractive long-term profit and cash flow story, but the firm remains cautious about near-term prospects.

"Growth may not be linear due to a weak consumer spending environment, variable AWS deal volume, and accelerated investments in areas such as Project Kuiper, generative AI, same-day fulfillment, and Prime Video digital content."

Analyst Arun Sundaram noted that this will translate into a “modest” third-quarter earnings beat. CFRA expects revenue to rise 10.5% year-over-year, with GAAP operating profit climbing 36%. CFRA’s estimates sit at the upper end of Amazon’s guidance range.

“Overall, investors will be watching to see if Amazon can strike the right balance between growth and investment,” Sundaram said.

The report indicated that although Amazon’s operating margins are expected to continue growing through 2025, reinvestment in other areas of the business may slow this expansion.

On October 21, CFRA lowered its price target for Amazon to $219 per share, suggesting a 13% upside.

Currently, Amazon’s stock is down over 2% in intraday trading, with support levels at $183.66, $180, and $169, while resistance stands at $195. Let’s wait and see if Amazon can exceed expectations and trigger a stock rebound in its earnings report.