The Zhitong Finance App learned that Amazon (AMZN.US) will release its second-quarter earnings report after the US stock market closes on July 30 (Thursday). Investors focus on three core signals: whether the cloud computing service business AWS is growing at an accelerated pace, whether retail profit margins remain stable, and whether huge spending in artificial intelligence (AI) related fields is expected to further drive future growth.
Analysts generally expect Amazon's Q2 revenue to reach 19.2 billion US dollars, up 17% year on year, slightly lower than the median value of the company's previous guidance range of 1940 billion to 1990 billion US dollars, but it is still expected to hit the fastest growth rate in five years; operating profit is expected to exceed 23 billion US dollars, and earnings per share are expected to be 1.81 US dollars, up from 1.64 US dollars in the previous quarter and 1.32 US dollars in the same period last year.
The much-publicized revenue growth rate of the AWS cloud business is expected to exceed 30% for the first time since 2022, and AI-related cloud services will continue to be the main driving force for growth.
AWS is seen as the biggest variable in this financial report. If AWS's performance is strong and management is confident about capacity expansion and corporate demand, then this financial report may further reinforce the market's optimistic expectations of Amazon's long-term profitability. However, if the company reports negative free cash flow for the second quarter, it could trigger pessimism.
Prime Day, one of Amazon's most important promotions of the year, will be temporarily brought forward from traditional July to June 23 to 26 in 2026. Holidays and sporting events are factors to consider in this date adjustment. The move will also affect second-quarter North American retail revenue and third-quarter results guidance.
The main topics of this Amazon earnings call will include the 2026 capital expenditure guidance update, expected return on investment due to huge AI investments, operating margin outlook, recent developments in Trainium and chip production capacity, and an in-depth analysis of Prime Day trends.
Wall Street analysts are showing strong results, and the Amazon Cloud business is expected to grow more than expected
Before Amazon announced its earnings report, many analysts believed that the AWS business is expected to grow at an accelerated pace.
Jefferies analyst Brent Thill believes that Amazon's AWS business growth rate in the second quarter will accelerate from 28% in the first quarter to 32%, and the company's operating profit margin will also reach 12%.
Wedbush analyst Ygal Arounian focuses on capital expenditure trajectories and free cash flow. “We expect the company to continue to invest heavily as Amazon expands Trainium production capacity and the Amazon Leo satellite network,” he said.
Wedbush predicts that Amazon's capital expenditure guidance for 2026 will be raised to more than 200 billion US dollars and will reach 266 billion US dollars in 2027. Arounian added, “We are concerned about the updated order backlog, AI annualized revenue, and more details about Trainium's external sales schedule.”
Bank of America believes that Amazon's strong performance is enough to convince investors that it is a major beneficiary in the AI field, and may send a signal that retail spending trends will remain steady. The bank reaffirmed Amazon's “buy” rating and a target price of $310.
Bank of America expects Amazon's second-quarter revenue of US$1988 billion and operating profit of US$24.1 billion, all higher than market expectations. The bank also raised the AWS revenue growth forecast for the second quarter to 33% from the previous 31%, an increase of 5 percentage points over the first quarter.
Bank of America pointed out that the surge in demand for computing power from AI model makers is the core driving force behind the accelerated growth of Amazon's cloud business, particularly demand from Anthropic and demand for Bedrock services based on OpenAI technology. Benefiting from high computing power resource utilization and pricing strategies, AWS's profit margin is expected to rise to 34% year over year, but due to rising equity incentive costs, profit margins will decline slightly from month to month.
According to Tipranks data, overall, Wall Street analysts rated Amazon a “strong buy”, with an average target price of $318.98, which is 37% higher than the latest closing price.
Since this year, Amazon's stock price has only accumulated a cumulative increase of less than 1%, which is far lower than the general market.