Amazon’s Q2 net sales are expected to be between $127.0 billion and $133.0 billion, JPMorgan expects its GMV will grow 11.6% year-over-over to $477 billion this year.
Amazon is scheduled to announce Q2 earnings results after the market closes on Thursday, August 3.
Latest Results
Amazon reported Q1 revenue of $127.4 billion, up 9% year-over-year, and Q1 earnings per share of 35 cents.AWS segment Q1 sales were $21.4 billion, up 16% year-over-year. Advertising unit revenue grew 23% year-over-year to $9.51 billion.
Q2 Guidance
Q2 net sales are expected to be between $127.0 billion and $133.0 billion, or to grow between 5% and 10% compared with Q2 2022. Operating income is expected to be between $2.0 billion and $5.5 billion, compared with $3.3 billion in Q2 2022.
Will AWS Q3 Revenue Guidance Alleviate the Growth Concerns?
A slowdown in cloud computing was expected in 2023, so Q2 AWS revenue and more importantly, Q3's AWS revenue guidance will be key factors that determine the stock's price action post-earnings. With AWS revenue rumored to cross $100 billion in 2023, a strong Q2 from AWS will go a long way in setting up the rest of the year.
Given the growth concerns in AWS by and of itself, Amazon already has its strategy in place for revenue generation. As CEO Andy Jassy explained, there are three layers of support to enhance revenue by providing (1) compute resources, (2) training capabilities, and (3) applications for generative AI and large language models ("LLM").
Amazon Prime Day Set U.S. Sales Record of $12.7 Billion
Amazon Prime Day 2023 broke records to become the retailer’s most successful to date. Total sales for the two-day event were $12.7 billion. That’s an increase of 6.1% over $11.9 billion in sales in 2022.
Prime members splashed out on more than 375 million products worldwide and saved over $2.5 billion on Amazon’s discounted deals.
Analyst Opinions
Wells Fargo reiterated an overweight rating and $159 price target and said that Amazon Web Services (AWS) expectations are rising ahead of the print and believed it will have 10% y/y growth compared with 8% growth weeks ago. Also, the Amazon risk/reward is still favorable on the print.
JPMorgan analysts Doug Anmuth and Bryan M. Smilek offered an Overweight rating and a price target of $145.They believed Amazon will be unseating Walmart as US largest retailer. In 2023, Amazon's gross merchandise volume, or GMV, will grow 11.6% year-over-over to $477 billion, and there will be about 300 million Prime members globally by the end of this year.
BofA analysts have a Buy rating and $154 price target on Amazon, said Prime Day units were very strong, meaning share gains are likely. The 375 million unit metric is up 25% y/y compared with 300 million for Prime Day 2022, with growth accelerating 5 percentage points from 20% implied unit growth last year. Discounting also seemed heavy; Amazon indicated members saved over $2.5bn (up 47% y/y compared with $1.7bn last year) across the Amazon store, suggesting further savings with Buy with Prime.
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