What to expect from Amazon's earnings ❓

The most important report of the day as far as the U.S. market and the Big-Tech sector is concerned will be Amazon's (AMZN.US) quarterly report today. The results will be presented to the public after the close of the cash session on Wall Street, and are expected to prove relatively favorable for the company itself. Analysts estimate that the e-commerce giant's sales rose 12% in the first quarter, driven by its cloud computing and advertising business. So what to expect from the results and what is worth paying special attention to? Let's find out together!

What factors to pay special attention to?

1. Investors will be watching to see if the company's artificial intelligence efforts drive Amazon Web Services' results (AWS sales excluding foreign exchange could rise 13%).

2. In the last report, phrases related to AI were mentioned 30 times, illustrating the company's commitment to the sector.

3. Investors will also be watching for updates on Prime Video's ad deployment. The sector could generate about $6.5 billion in additional revenue. As many as 56% of those surveyed by Bloomberg indicated that they had increased their ad spending on Amazon by 10% year-over-year. (These will be Amazon's first financial results since the company introduced ads to Prime Video in January, creating a new source of revenue!)

4. Operating margin may increase due to cost efficiency and advertising contribution (+104% y/y).

Key financial metrics we'll be looking at:

Q1

• Estimated net sales of $142.59 billion (+11.96% y/y)
• Estimated operating profit $10.95 billion (+129.41% y/y)
• Estimated operating margin 7.63% (+103.5% y/y)
• Estimated EPS of 82 cents (+166.85% y/y)
• Estimated net sales at online stores $54.77 billion (+7.18% y/y)
• Estimated net sales in physical stores $5.08 billion (+3.86% y/y)
• Estimated net sales of third-party vendor services $34.63 billion (+16.13% y/y)
• Estimated net sales of subscription services $10.83 billion (+12.17% y/y)
• Estimated AWS net sales $24.11 billion (+12.91% y/y)
• Estimated net sales in North America $85.55 billion (+11.28% y/y)
• Estimated international net sales $32.47 billion (+11.48% y/y)
• Estimated order fulfillment costs $22.4 billion (+7.17% y/y)

The company may also provide guidance for Q2 results. Here are our forecasts:

• Estimated net sales of $150.21 billion (+11.78% y/y)
• Estimated operating profit of $12.54 billion (+63.46% y/y)

In the broad market, Amazon is seen as one of the leaders in the implementation of AI tools in its business process. Given the dependence of market sentiment on the progressive adoption of this sector of the economy, we can expect the reaction to AWS's performance to induce high volatility in the company's stock valuations after the close of trading. Amazon believes that its cloud-based generative artificial intelligence services can generate billions in revenue in the coming years and has invested heavily in the technology to accelerate its development. 

The company's chart before today's report (D1 interval):

The options market now implies that the magnitude of this volatility could reach up to +-8%. Disclaimer: Indications of implied volatility of the options market do not constitute recommendations under the law! Source: xStation