Amazon (AMZN) will report its third quarter earnings after the bell on Wednesday as the tech giant looks to assure investors that its AWS is every bit the AI powerhouse as Microsoft’s (MSFT) Azure and Google’s (GOOG, GOOGL) Google Cloud Platform.
The announcement also comes after Reuters reported Amazon plans to cut 30,000 corporate jobs.
Amazon stock is lagging Microsoft’s and Google’s, climbing just 2.3% versus Microsoft’s 24% increase and Google’s 37% jump. Part of that has to do with the perception that AWS simply isn’t capturing as much of the AI market as its biggest rivals.
While Microsoft counts OpenAI among its most important AI clients and Google has Gemini, Amazon relies on Anthropic for massive AI exposure. And the company splits that with Google, which also provides cloud computing services to Anthropic.
Last week, the AI startup signed a massive multibillion-dollar deal with Google that will see it use up to 1 million Google TPUs (tensor processing units) to train and power its AI offerings. And while Amazon offers its Bedrock platform, which allows customers to quickly access leading AI models, sentiment is in favor of Microsoft and Google.
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“Other cloud providers are getting more credit for AI contributions,” KeyBanc Capital Markets analysts wrote in a note to investors.
“AWS is lagging the peer group on a revenue [percentage] growth basis. Although we believe this is largely a function of scale, Amazon is being viewed as losing share to the market due to the shift in computing,” the analysts wrote. “We believe this is demonstrated in the [year-to-date] price performance relative to peers, although it is not a perfect indication of sentiment given the non-cloud related factors inherent in the conglomerates.”
For Q3, Amazon is expected to post earnings per share (EPS) of $1.58 on revenue of $177.8 billion, according to Bloomberg consensus estimates. The company saw EPS of $1.43 and revenue of $158.9 billion in Q3 last year.
AWS is expected to bring in $32.4 billion, up 18% from the $27.5 billion the segment generated in the third quarter of last year.
Despite the broader market sentiment, Wedbush analyst Scott Devitt said things could be looking up for the company going forward.
“We are constructive on the setup leading into the report given positive commentary around AWS growth, healthy trends for the core retail business, and strong advertiser demand,” he wrote in a note to investors ahead of Amazon’s earnings.
