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Will Solid AWS Momentum Aid Amazon's (AMZN) Q1 Earnings?
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Amazon (AMZN - Free Report) is set to report first-quarter 2023 results on Apr 27.
The company is expected to have continued gaining from solid momentum in the rapidly growing cloud market on the back of its cloud computing division, Amazon Web Services (“AWS”).
We note that the growing popularity and strong adoption of AWS have been aiding Amazon in generating high margins from the cloud business. The trend is expected to have continued in the yet-to-be-reported quarter.
AWS’ revenues were $21.4 billion in fourth-quarter 2022, accounting for 14% of net sales, rising 20% year over year.
We believe that an expanding customer base and a strong discount offering for long-term deals are likely to have driven the AWS top line in the quarter under review.
The Zacks Consensus Estimate for first-quarter 2023 AWS net sales is pegged at $21.1 billion, indicating an improvement of 14.2% from the year-ago quarter’s reported figure.
Click here to find out how the company’s overall first-quarter performance is expected to have been.
The expanding data center network and an increasing number of AWS regions and availability zones are likely to have acted as tailwinds.
In the first quarter, the company launched an infrastructure region in Melbourne, Australia, which marked its second region in Australia and bolstered AWS’ presence in the Asia-Pacific region.
Strength across the AWS cloud services portfolio is expected to have continued benefiting the segment’s performance in the first quarter.
Both factors are expected to have aided Amazon in sustaining momentum among existing customers and attracting new ones.
In the quarter under review, AWS was selected by Southwest Airlines Co. (LUV - Free Report) as the preferred cloud provider. With the aid of AWS’s robust portfolio of cloud technologies and global infrastructure, Southwest Airlines strives to boost its digital transformation efforts, deliver a responsive customer support experience, streamline its operations and unveil advanced digital solutions.
AWS was also picked by Zurich Insurance Group. The latter migrated its enterprise information technology infrastructure to AWS.
The impacts of the strengthening customer base are likely to have driven AWS's top-line growth in the first quarter.
Zacks Rank & Stocks to Consider
Currently, Amazon carries a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Computer & Technology sector may consider some better-ranked stocks like Salesforce (CRM - Free Report) and Arista Networks (ANET - Free Report) . Salesforce sports a Zacks Rank #1 (Strong Buy) and Arista Networks carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Salesforce’s shares have risen 10.6% in the past year. CRM’s long-term earnings growth rate is anticipated to be 16.75%.
Arista Networks’ shares have risen 32.3% in the past year. ANET’s long-term earnings growth rate is projected to be 14.17%.
Image: Bigstock
Will Solid AWS Momentum Aid Amazon's (AMZN) Q1 Earnings?
Amazon (AMZN - Free Report) is set to report first-quarter 2023 results on Apr 27.
The company is expected to have continued gaining from solid momentum in the rapidly growing cloud market on the back of its cloud computing division, Amazon Web Services (“AWS”).
We note that the growing popularity and strong adoption of AWS have been aiding Amazon in generating high margins from the cloud business. The trend is expected to have continued in the yet-to-be-reported quarter.
AWS’ revenues were $21.4 billion in fourth-quarter 2022, accounting for 14% of net sales, rising 20% year over year.
We believe that an expanding customer base and a strong discount offering for long-term deals are likely to have driven the AWS top line in the quarter under review.
The Zacks Consensus Estimate for first-quarter 2023 AWS net sales is pegged at $21.1 billion, indicating an improvement of 14.2% from the year-ago quarter’s reported figure.
Click here to find out how the company’s overall first-quarter performance is expected to have been.
Amazon.com, Inc. Price and Consensus
Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote
Factors to Consider
The expanding data center network and an increasing number of AWS regions and availability zones are likely to have acted as tailwinds.
In the first quarter, the company launched an infrastructure region in Melbourne, Australia, which marked its second region in Australia and bolstered AWS’ presence in the Asia-Pacific region.
Strength across the AWS cloud services portfolio is expected to have continued benefiting the segment’s performance in the first quarter.
Both factors are expected to have aided Amazon in sustaining momentum among existing customers and attracting new ones.
In the quarter under review, AWS was selected by Southwest Airlines Co. (LUV - Free Report) as the preferred cloud provider. With the aid of AWS’s robust portfolio of cloud technologies and global infrastructure, Southwest Airlines strives to boost its digital transformation efforts, deliver a responsive customer support experience, streamline its operations and unveil advanced digital solutions.
AWS was also picked by Zurich Insurance Group. The latter migrated its enterprise information technology infrastructure to AWS.
The impacts of the strengthening customer base are likely to have driven AWS's top-line growth in the first quarter.
Zacks Rank & Stocks to Consider
Currently, Amazon carries a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Computer & Technology sector may consider some better-ranked stocks like Salesforce (CRM - Free Report) and Arista Networks (ANET - Free Report) . Salesforce sports a Zacks Rank #1 (Strong Buy) and Arista Networks carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Salesforce’s shares have risen 10.6% in the past year. CRM’s long-term earnings growth rate is anticipated to be 16.75%.
Arista Networks’ shares have risen 32.3% in the past year. ANET’s long-term earnings growth rate is projected to be 14.17%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.