Amazon will release its third-quarter earnings after the closing bell on Thursday.
Shares in the tech giant were up 27% year-to-date through Wednesday.
Wall Street is bullish on the stock, though uncertainty lingers around Amazon's consumer health.
Amazon will report third-quarter earnings on Thursday after the closing bell.
Top of mind for investors will be the company's cloud platform and advertising strength. But there are still worries about slowing retail margins and Amazon's rising investments in other areas of its business.
Amazon's stock was up 27% year-to-date through Wednesday's close, outpacing the the S&P 500's 22% gain.
CFRA says Amazon needs to strike a balance between growth investment
CFRA analyst Arun Sundaram is cautious about Amazon's near-term trajectory, even if the company has compelling prospects over the long run.
The firm expects Amazon to notch a "modest" earnings beat after the bell: it predicts revenue to rise 10.5% year-over-year and GAAP operating profit to climb 36%.
While AWS and advertising momentum work in Amazon's favor, Sundaram will monitor how the firm's other investments affect profits.
Though growth in other parts of Amazon's business should cover these investments, CFRA expects profits to expand more moderately into 2025.
CFRA also cited that Amazon is experiencing a tepid spending environment as consumers shift to lower-priced products.
The company trimmed its Amazon price target to $219 a share on October 21, indicating 17% upside ahead.
JPMorgan says cloud computing will be a key area of strength
Annegret Hilse | REUTERS
JPMorgan highlighted Amazon Web Services, the firm's cloud computing system, as a chief reason to stay bullish on the stock.
AWS will continue accelerating through 2025, aided by optimizations, new workload migrations, and Amazon's growing monetization of artificial intelligence. The bank predicts AWS grew 21% year over year, surpassing Wall Street expectations.
JPMorgan expects third-quarter net sales to reach $157 billion, falling under consensus estimates of $157.3 billion.
Retail profits were likely pressured in the last quarter amid spending headwinds, including Prime Day discounts. According to the bank, consumers have turned cautious on discretionary items, while indicating a preference for deals. Together, these factors have depressed Amazon's average selling prices.
JPMorgan has an "overweight" rating on Amazon and a $230 price target. This suggests nearly 23% upside from current levels.
Amazon's consensus third-quarter net sales estimate is $157.29 billion.
3rd quarter
Net sales estimate: $157.29 billion
Online stores net sales estimate: $59.64 billion
Physical Stores net sales estimate: $5.17 billion
Third-Party Seller Services net sales estimate: $38.22 billion
Subscription Services net sales estimate: $11.17 billion
AWS net sales estimate: $27.49 billion
North America net sales estimate: $95.22 billion
International net sales estimate: $34.55 billion
Third-party seller services net sales excluding F/X estimate: +11.8%
Subscription services net sales excluding F/X estimate: +9.86%
Amazon Web Services net sales excluding F/X estimate: +19.2%