Amazon Prepares to Release First-Quarter 2025 Financial Results
Amazon (AMZN) is set to report its first-quarter 2025 results on May 1.
Quarterly Sales and Earnings Projections
For Q1, net sales are forecasted to fall between $151 billion and $155.5 billion, reflecting a growth range of 5-9% from the same quarter last year. Management anticipates a negative foreign exchange impact of about 150 basis points.
The Zacks Consensus Estimate for net sales stands at $154.56 billion, suggesting an increase of 7.85% from the previous year’s results. Analysts estimate that first-quarter earnings will be $1.35 per share, marking a 19.47% rise compared to the prior-year quarter.
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Earnings Surprise History
Amazon has shown a strong earnings surprise record. In the last reported quarter, it achieved an earnings surprise of 22.37%. The company’s earnings have exceeded the Zacks Consensus Estimate in each of the last four quarters, with an average surprise of 25.27%.
Amazon.com, Inc. Price and EPS Surprise
Amazon.com, Inc. price-eps-surprise | Amazon.com, Inc. Quote
Earnings Whispers for Amazon
Our analysis does not indicate a favorable outcome for Amazon’s earnings in this quarter. With an earnings ESP of -2.57% and a Zacks Rank of #3 (Hold), the conditions for a significant earnings beat appear less favorable.
Factors Influencing Upcoming Results
As Amazon gears up to release its first-quarter 2025 earnings, investors are met with a mixed outlook. Despite strengths across various segments, concerns about unfavorable conditions urge a cautious stance. Management identified two main challenges: foreign exchange impacts and the lack of leap year benefits. The previous year’s first quarter gained $1.5 billion in sales from leap year adjustments, making comparisons tougher this year. Furthermore, the anticipated foreign exchange headwind is projected at about $2.1 billion.
Cloud and AI Developments
Amazon Web Services (AWS) remains a pivotal part of the company’s offerings, with expectations of $29.31 billion in sales, indicating a 17.1% year-over-year growth. The quarter also saw advancements in Amazon Ads, as new generative AI capabilities were added to Amazon Marketing Cloud, enabling faster insights for advertisers. AWS recently gained a major client, launching Wim, a cloud-native mobile network operator in Mexico, further highlighting its versatility beyond traditional applications.
Entertainment Growth
With expanding content, Amazon’s streaming segment continues to take shape. Prime Video commenced its first NASCAR season coverage while MGM+ unveiled a trailer for the upcoming series Nine Bodies in a Mexican Morgue. These initiatives may bolster subscription service sales to approximately $11.5 billion, reflecting 6.8% growth year-over-year.
E-commerce and Retail Performance
The physical retail sector is projected to grow as well, with estimates suggesting sales of $5.42 billion, a 4.2% increase from last year. The integration of technology like Amazon Dash Cart is enhancing the omnichannel experience.
Third-party seller services are also on the rise, with estimates reaching $36.61 billion, up 5.8% year-over-year. This showcases Amazon’s effectiveness in leveraging its marketplace platform.
Stock Performance Overview
Year-to-date, Amazon’s shares have declined by 13.9%, underperforming the Zacks Retail-Wholesale sector and the S&P 500, which fell by 3.7% and 6.4%, respectively.
Year-to-Date Stock Performance
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Currently, Amazon appears to be trading at a premium, with a forward 12-month…
Amazon’s Mixed Outlook Ahead of Q1 2025 Earnings Report
Amazon’s price-to-sales (P/S) ratio stands at 2.81X, surpassing the Zacks Internet – Commerce industry average of 2.09X. This disparity indicates a stretched valuation for the company.
Amazon’s P/S F12M Ratio Indicates Valuation Challenges
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Investment Analysis
As Amazon approaches its first-quarter 2025 earnings, the investment case remains mixed, leading to a Hold recommendation. The company’s strength is evident in multiple segments, with AWS (Amazon Web Services) expected to achieve 17.1% growth year-over-year, reaching $29.31 billion. Key strategic initiatives, including advancements in artificial intelligence, NASCAR streaming rights, and expanding entertainment content, support this outlook. However, near-term challenges compel caution among investors.
Guidance for the upcoming quarter indicates operating income between $14.0 billion and $18.0 billion, compared to $15.3 billion in the same quarter last year. This projection highlights potential margin pressures. Adding to this concern are foreign exchange headwinds and difficult year-over-year comparisons, suggesting that significant growth acceleration may not materialize as anticipated. Current shareholders may want to hold their positions, while new investors might consider waiting for more favorable entry points following the earnings announcement.
Conclusion
Amazon’s continued innovation—spanning AI-driven advertising tools, streaming content, and cloud infrastructure—should be met with cautious optimism as the first-quarter 2025 earnings approach. The expected foreign exchange impacts of $2.1 billion, along with the absence of leap year advantages, may create hurdles. Although AWS remains a robust growth engine and third-party seller services are on the rise, these short-term challenges necessitate a Hold recommendation for existing investors. Potential investors should wait for clearer signals post-earnings before making new commitments.
