Amazon (AMZN) is slated to report its financial results for the fourth quarter of 2023 on February 1.
The company anticipates net sales ranging between $160 billion and $167 billion, reflecting a 7-12% surge from the prior year.
Analysts project net sales to hit $166.26 billion, indicating an 11.4% increase from the previous year.
Fourth-quarter earnings are estimated at 81 cents per share, marking a substantial leap from 21 cents in the corresponding quarter of the prior year. The figure has risen 2.5% over the past seven days.
Amazon has outpaced the Zacks Consensus Estimate in each of the last four quarters, with an average positive surprise of 54.9%.
The Road to Expectation
The company’s robust holiday performance, propelled by potent holiday campaigns, is anticipated to have greatly contributed to the rise in its top-line revenue. Amazon recorded record-breaking sales on Black Friday and Cyber Monday, reflecting its strong consumer appeal.
Furthermore, the expansion of its distribution network, coupled with swift delivery services like Prime Free One Day and Prime Free Same-Day Delivery, as well as robust grocery services, are expected to have bolstered its online retail business in Q4.
Global Footprint and Streaming Magic
Amazon’s expanding e-commerce business, alongside the global augmentation of Prime, are expected to have significantly impacted its operational performance. The company’s growing network of Amazon Fresh grocery stores, Whole Foods outlets, and Amazon Go shops across the United States are anticipated to have driven sales momentum in the fourth quarter.
The consensus forecast for fourth-quarter physical store sales is valued at $5.31 billion, signaling a 7% increase compared to last year’s figure. Moreover, the burgeoning relationships with third-party sellers may have also played a pivotal role in Amazon’s financial success, with the consensus projection for sales generated by third-party sellers expected to grow by 14.1% from the previous year.
Amazon’s Prime Video, with its expanding original content and enhanced content portfolios, is likely to have engaged more Prime subscribers. The company is also expected to have reaped the benefits of a thriving Amazon Music, which could reflect in its Q4 results.
The AWS Impact
The company’s broadening Amazon Web Services (AWS) portfolio is expected to have substantially impacted its fourth-quarter performance. Noteworthy introductions to AWS, such as the palm-based identity and the fully managed service Amazon One Enterprise, along with the generative AI-powered chatbot Amazon Q, are among the innovations that may have driven AWS revenues.
AWS Graviton4 and AWS Trainium2, as the company’s next-generation two-chip families, are likely to have contributed to the revenue stream. Furthermore, the recent announcement of the general availability of Amazon S3 Express One Zone and new Amazon SageMaker capabilities for scaling with models are indicative of the company’s commitment to innovation, potentially enhancing customer adoption.
The Rise of Smart Devices
The robust performance of Amazon’s Fire products, its portfolio of Echo smart speakers, Blink doorbells, and eero products could have potentially bolstered its financial performance in Q4. Amazon’s emphasis on refining Alexa features might also have augmented the user experience, subsequently impacting its upcoming results.
Nevertheless, inflationary pressures, geopolitical tensions, and foreign currency challenges may have posed some concerns for the company.
Model Prediction and Stocks to Watch
Analysts do not conclusively predict an earnings beat for Amazon in this quarter. Amazon has an Earnings ESP of -0.04% and a Zacks Rank #2 at present.
Meanwhile, Apple (AAPL) has an Earnings ESP of +2.13% and a Zacks Rank #2. The company is scheduled to release first-quarter fiscal 2024 results on the same day as Amazon. Expedia Group (EXPE) also presents an optimistic picture with an Earnings ESP of +4.79% and a Zacks Rank #3.
