Can Amazon’s July 30 earnings revive stock after slump?
Amazon has spent more than $200 billion on data centers and infrastructure. July 30 earnings will report quarterly results and updated guidance as the stock lags peers.
Amazon’s shares have risen about 8% year to date and roughly 10% over the past 12 months, trailing several large-cap peers. The company reports quarterly results on July 30; capital spending and cloud investments are central items for investors.
Amazon has been investing heavily in data centers and related infrastructure. Management expects capital outlays to exceed $200 billion this year as memory, server and chip prices rise. The spending has reduced free cash flow to about $1.2 billion on a trailing 12-month basis, while operating income increased to more than $23.9 billion.
In the first quarter, Amazon reported sales of $181 billion, a 17% increase from a year earlier. AWS revenue was $37.8 billion, up 28% year over year. North America sales were $104 billion, a 12% increase, and international sales rose 19%. AWS provided $14.2 billion of operating income for the period.
Amazon’s custom chip business, including Graviton, Trainium and Nitro, has reached an annual revenue run rate of about $20 billion. The company has a deal with OpenAI that calls for OpenAI to consume roughly 2 gigawatts of Trainium capacity.
Analysts expect second-quarter revenue to increase about 16.8% to more than $195 billion and project AWS growth near 25% as Amazon expands cloud market share. Consensus models for the full year put revenue near $823 billion, with forecasts around $930 billion for the following year.
Valuation metrics show a forward price-to-earnings multiple near 29, compared with a sector median of about 15. The average analyst price target is about $312, implying upside from current levels; KeyCorp’s target is $335. Several firms maintain positive ratings, including Outperform from Wedbush, Buy from Citigroup and Market Outperform from Citizens.
On the price chart, the stock has recovered from a July low near $225 to about $250, crossed its 50-day and 100-day moving averages and is trading near the 23.6% Fibonacci retracement level. Technical measures show a year-to-date high of $278 as a reference level.
The July 30 report will include quarterly revenue and profit figures and updated guidance. The filing is expected to provide metrics on cloud demand, AI-related spending and capital allocation that will be used to assess revenue momentum, operating income and free cash flow.
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