Amazon will report fourth quarter earnings late Thursday as the stock hovers near all-time highs. Amazon stock has mostly maintained its strength in the past two weeks despite concerns about tariffs, and the arrival of DeepSeek roiling tech stocks.
Here's what to watch from the tech behemoth's report:
Amazon Q4 Earnings, Sales Expectations
Analysts expect Amazon's earnings to increase 48% to $1.49 per share, according to FactSet. Sales are expected to increase 10% to $187.3 billion.
Investors are likely to remain focused on the growth rate for AWS, as well as Amazon's North American retail operating income. Analysts are looking for 19.3% growth for cloud revenue, a slight acceleration from Q3.
For retail, investors have been debating whether ramping Project Kuiper satellite costs could bite into margins, though Amazon's strong Q3 profits eased some nerves already.
Amazon's operating income is projected to reach $19 billion for Q4, according to FactSet.
Evercore ISI analyst Mark Mahaney said in a client note Sunday that he expects Amazon is most likely to beat Q4 expectations while bracketing estimates for its revenue and operating income guidance in the current quarter.
"We view (Wall) Street's Q4 revenue estimate and the Street's operating income estimate (implying 10.1% margin, vs. 11.0% in Q3) as both reasonable," Mahaney wrote.
What Will Tariffs Mean For Amazon Stock?
Tariffs have been a frequent point of discussion among companies that have reported earnings in the past couple weeks. Amazon Chief Executive Andy Jassy could update investors on what impact the company expects from President Donald Trump's announced new tariffs on Canada and Mexico, as well as increased tariffs on goods from China. Trump delayed the tariffs on Canada and Mexico by a month on Monday but the China tariffs took effect Tuesday.
Trump is also suspending an exemption on imports under $800, a trade clause that has allowed e-commerce firms to send some goods straight to Americans from merchants in China.
BofA Securities analyst Justin Post, who rates Amazon stock a buy, wrote Monday that Trump's tariffs are a "sector negative" for Amazon.
"But Amazon seems relatively well positioned with 1) a low-price focus, and 2) a large third-party marketplace (60% of units) that captures final value commissions and any geographic substitution in demand," Post said in a note to investor clients.
Amazon's AI Push: DeepSeek Impact
Amazon may also comment on the rapid emergence of DeepSeek, the Chinese AI startup that last month released an open-source large language model it said performed comparably to OpenAI's models.
DeepSeek's emergence roiled AI stocks such as Nvidia early last week, as investors debated whether the lower-cost model would slow spending on AI-related computing infrastructure.
Amazon has spent big on capital expenditures to serve AI demand through AWS. But the company has focused on offering a range of large language models for enterprise customers through its Amazon Bedrock service. AWS announced late last week that DeepSeek is available on Bedrock.
The debate among analysts is whether lower-cost AI models will change capex investment plans from cloud hyperscalers such as Amazon.
"Where the risk lies (for hyperscalers) is if lower AI-related costs are passed onto customers — this could slow revenue growth for the hyperscalers, although costs should also come down and protect margins," CFRA analyst Angelo Zino wrote in a research note late last week. "However, this risk seems like it could be more than offset by new volume and demand from customers that would have otherwise been slow to adopt AI. Amazon seems well positioned given its breadth of AI-related products and services."
Amazon Stock Near Buy Zone
Meanwhile, MarketSurge shows Amazon stock hovering within a 5% buy range above a 233 entry point from a flat base pattern.
Amazon stock has gained roughly 8% so far this year after gaining 45% in 2024.
The IBD Stock Checkup tool shows Amazon stock holds a best-possible 99 IBD Composite Rating. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
