Tech earnings season: How will it reshape the industry landscape?
Amazon’s Options Market Signals 7% Share Price Move After Earnings: Options Chatter
$Amazon (AMZN.US)$’s options market is implying a 7% move in the share price a day after the e-commerce giant reports its fourth quarter financial results late Thursday.
The tech giant’s dominance in cloud services, its spending on artificial intelligence and the impact on its ads business were among the aspects of the financial results that are likely to gain Wall Street’s attention.
Analysts, on average, expect Amazon Web Services’ revenue growth to accelerate to 21% in the fourth quarter, from 20% in the previous three months, according to estimates compiled by Bloomberg. That could put the revenue for that segment in the quarter ended December at $34.88 billion, ahead of Microsoft’s $32.9 billion for its Intelligent Cloud business.
“AWS has strong momentum, capitalizing on cloud computing and AI secular trends,” CFRA analyst Arun Sundaram wrote in a note to clients. “Advertising should see continued growth from live sports and Prime Video monetization.”
Total revenue is expected to grow 12.6% to $211.48 billion in the fourth quarter, according to Bloomberg consensus. Earnings are seen rising to $1.99 a share, from $1.86 a year earlier.
Ad services revenue is anticipated to jump 21.9% to $21.16 billion, according to Wall Street consensus.
“Amazon.com's nearly $70 billion advertising revenue run rate makes it the third-largest ad platform after $Alphabet-A (GOOGL.US)$ and Meta,” Bloomberg Intelligence industry analysts Geetha Ranganathan and Poonam Goyal, wrote in a note Monday. “Retail media remains a key growth lever, and Prime Video positions the business for high-teens growth, potentially lifting ad revenue well over $100 billion by 2028.”
Ad impressions on $Meta Platforms (META.US)$ apps including Facebook, Instagram and Whatsapp increased by 18% in the fourth quarter, rising at triple the pace that analysts were expecting. That helped convince Wall Street that the company’s billions of dollars in spending in artificial intelligence is paying off.
In the case of Amazon, analysts expect the company to rise to $34.46 billion in the fourth quarter, from $27.83 billion a year earlier. The rest of the financial results will determine whether Wall Street would cheer Amazon or send the stock slumping, as was the case with $Microsoft (MSFT.US)$.
Microsoft’s stock plunged 10% a day after the software giant reported a 66% jump in its fiscal second quarter spending to a record, and said almost half of its $625 billion in remaining performance obligation, a measure of bookings, is from OpenAI.
That was Microsoft’s worst slump in six years, and the decline hasn’t stopped. The stock is now down more than 24% from its all-time high reached in October.
Share your thoughts on Amazon in the comments section. Do you expect the financial results to impress Wall Street and send the stock higher, or will it go down at the same magnitude as Microsoft? Let your voice be heard by voting below. And if you want And if you want to read more options columns like this one on Nvidia, or this one on Tesla and Google parent Alphabet, follow me here, where you can also find my column that tracks short sellers' trading volume and some of the earnings stories on some of the biggest stocks.
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