Amazon ETFs in Focus Ahead of Key Earnings Report

Two of the Magnificent Seven will announce earnings this week, starting with Amazon.com Inc., which reports after the bell today. 

The e-commerce and cloud giant is anticipated to have made $0.83 per share in earnings during the first quarter and $142.6 billion in revenues.  

Investors are eager to see whether the company echoes comments made by Microsoft, when it announced its earnings last week, about strong demand for AI-powered products. 

Amazon Web Services is the number one provider of cloud computing services, ahead of Microsoft’s Azure, but the latter has a reputation for being ahead when it comes to AI. 

Additionally, investors will be interested to know whether Amazon’s original e-commerce business continued to grow double-digits in Q1 like it did in Q4. 

Though it has elements of both a retailer and technology company, Amazon is classified as a consumer discretionary stock under the Global Industry Classification Standard. 

It’s the largest holding by far in the $19 billion Consumer Discretionary Select Sector SPDR Fund (XLY), where it has a 24.1% weighting currently. 

Bullish Analysts  

Analysts are mostly bullish on Amazon with Mizuho saying that “Amazon is our top pick due to the positive ecommerce checks and accelerating AWS trends.” Mizuho has a $230 price target on the stock. 

Meanwhile, analysts at Needham, who have a $205 price target on the shares, said that it expects Amazon’s cost-cutting actions from last year to “drive margin expansion throughout 2024.” 

They also believe that the company has a “best-in-class strategic position related to Generative A.I.” 

“AMZN is developing GenAI chips to train and drive better inferences from LLMs (large language models), AND it has the widest variety of choices related to LLMs, because it offers a captive O&O (owned & operated) LLM, and it also hosts dozens of other LLMs of various sizes. 

This is a unique strategic position, and since digital markets have ‘winner take most’ economics, we are optimistic that AMZN will be one of the 2-3 winners from GenAI,” the analysts wrote in a recent research note.