Amazon.com's upcoming earnings report this Thursday has become the absolute focus of the entire market, with investors urgently seeking key clues about the growth prospects of the cloud computing industry from it. Following Microsoft's sharp stock correction due to slowing cloud business growth, risk aversion sentiment in the technology sector is highly tense. Since reporting earnings on January 28, Microsoft's stock price has fallen by a cumulative 14%, wiping out over $500 billion in market capitalization. This plunge is primarily attributed to slowing growth in its core cloud platform, Azure, which has sparked widespread investor concern across the entire industry. Concurrently, although Alphabet disclosed strong cloud business growth, its stock price fell in after-hours trading due to the announcement of a capital expenditure plan for 2026 that far exceeded expectations. This has further intensified market doubts about the high investments and return cycles for tech giants in the AI field.
The current market anxiety centers on whether the slowdown in Microsoft Azure's growth is a company-specific issue or signals a broader weakness facing cloud service providers. According to Bloomberg, David Miller, Chief Investment Officer at Catalyst Funds, noted: "It's unclear how much of Microsoft's disappointment is due to their own issues and how much reflects a general slowdown in the cloud space. If it's the latter, that impact could persist." Against this backdrop, Wall Street analysts expect Amazon AWS revenue for the fourth quarter to grow 21% year-over-year to $34.8 billion. Given Amazon's relatively lagging stock performance, investors are eagerly searching for catalysts for an upward move in the share price, while closely monitoring its margin expansion and the robustness of its retail business.
**Valuation and Market Expectations** Amazon's stock has performed modestly over the past year and is in dire need of an earnings boost. As the worst-performing stock among the "Magnificent Seven" last year, Amazon rose only 5.2%, and its gains at the start of 2026 are less than 1%. In contrast, the Nasdaq 100 Index surged 20% in 2025. Melissa Otto, Head of Technology, Media, and Telecom Research at Visible Alpha, stated: "The key is what is already priced into the stock. I think what Microsoft started to price in was a higher growth rate, which is always a bit dangerous. We haven't seen Amazon rally in the same way." From a historical valuation perspective, Amazon's current stock price is relatively cheap. The stock's forward P/E ratio is about 24 times, significantly below its 10-year average of 46 times and on par with the valuation of the Nasdaq 100 Index. Options data compiled by Bloomberg indicates the stock could experience a move of about 7% following the earnings report. David Miller added that investors are looking for "extremely high growth rates," as merely "high growth" is no longer sufficient to meet market expectations.
**Key Financial Data Preview** Beyond the anticipated $34.8 billion revenue from the AWS division, Wall Street has specific forecasts for Amazon's overall performance. Analysts expect Amazon's total fourth-quarter revenue to grow 13% to $211.5 billion, with adjusted earnings per share projected to increase 8% to $2.40. Although Amazon's stock surged nearly 10% after its October earnings report, driven by better-than-expected AWS revenue, investors are now trying to sift winners from losers based on performance amidst the "anti-software sentiment" currently weighing on the broader tech sector and the backdrop of hundreds of billions in AI spending.
**Capital Expenditure and AI Investment Strategy** In addition to core cloud business growth, the market will closely monitor Amazon's future capital expenditure guidance and the progress of its specific investments in the artificial intelligence field. Particularly after Microsoft's aggressive AI-related capital expenditures contrasted with its slowing growth, new questions have emerged about return on investment. Investors will scrutinize Amazon's investment in Anthropic PBC and a potential $50 billion investment in OpenAI. In November 2024, Amazon invested $8 billion in Anthropic, the maker of the Claude chatbot. An increase in the value of this stake could boost Amazon's earnings. Previously, Amazon's third-quarter profit grew 38%, partly due to a $9.5 billion pre-tax gain from this investment. Currently, Anthropic is in talks for a new funding round that could value the company at $350 billion. Furthermore, investors will focus on the performance of the AI chatbot "Rufus" within Amazon's retail business to gauge the effectiveness of AI technology application in its core retail operations.
**Cloud Business Remains the Core Bellwether** Despite Amazon's diversified revenue streams, where its retail business and other segments might provide a buffer if AWS underperforms, the cloud business undoubtedly remains the top priority for investor scrutiny. Dec Mullarkey, Managing Director at SLC Management, said: "They do have the advantage of some diversification, but the cloud business and AWS are their 'crown jewel.' So, they have to show a stable and fairly straightforward outlook because that will be the focus."
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