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Amazon (AMZN - Free Report) is scheduled to report fourth-quarter 2023 results on Feb. 1.

For the fourth quarter, the company expects net sales between $160 billion and $167 billion, which represents 7-12% year-over-year growth.

The Zacks Consensus Estimate for net sales is pegged at $166.26 billion, indicating growth of 11.4% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 81 cents per share, which indicates a massive jump from 21 cents reported in the year-ago quarter. The figure moved 2.5% upward over the past seven days.

The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 54.9%.
 

Amazon.com, Inc. Price and EPS Surprise

Amazon.com, Inc. price-eps-surprise | Amazon.com, Inc. Quote
 

Holiday, Prime, Retail & Streaming Momentum to Aid

The company’s solid holiday performance, backed by strong holiday initiatives, is expected to have contributed well to top-line growth. It witnessed record-breaking sales on Black Friday and Cyber Monday.

Amazon’s expanding distribution network, Prime-enabled fast delivery, including Prime Free One Day and Prime Free Same-Day Delivery services, and robust grocery services are expected to have aided the performance of its online retail business in the fourth quarter.

The company’s growing worldwide e-commerce business, along with the expanding global footprint of Prime, is expected to have contributed well.

The Zacks Consensus Estimate for online store sales is pegged at $68.53 billion, indicating a growth of 6.2% from the year-ago reported figure.

Amazon’s aggressive stance on bolstering its physical presence is expected to have benefited the quarterly performance.

Growing momentum across Amazon Fresh grocery stores, Whole Foods stores, and Amazon Go outlets across the United States is anticipated to have contributed well to the company’s sales in the fourth quarter.

The consensus mark for the fourth quarter’s physical store sales is pegged at $5.31 billion, indicating growth of 7% from the figure reported in the year-ago quarter.

In addition, strengthening relationships with third-party sellers might have remained a positive. The consensus mark for sales generated by third-party sellers is pegged at $41.5 billion, indicating growth of 14.1% from the figure reported in the prior-year quarter.

Coming to streaming services, solid momentum across Prime Video is anticipated to have been a major tailwind in the soon-to-be-reported quarter. Expanding original content and overall content portfolios on Prime Video are likely to have accelerated Prime engagement.

Gains from the growing momentum across Amazon Music are expected to be reflected in the company’s fourth-quarter results.

Prime benefits in retail as well as in online streaming fields might have continued aiding Amazon’s subscription revenue growth in the quarter under review.

The Zacks Consensus Estimate for subscription service sales is pegged at $10.4 billion, suggesting growth of 13.2% from the year-ago reported figure.
 

AWS Portfolio Strength to Consider

The company’s expanding Amazon Web Services (“AWS”) portfolio is expected to have benefited the fourth quarter’s performance.

In the quarter under review, AWS introduced a palm-based identity and a fully managed service called Amazon One Enterprise. The service offers accurate and secured enterprise access control through an easy-to-use biometric identification device.

It also unveiled a generative AI-powered chatbot, Amazon Q. The AI-powered assistant provides quick answers and helps in content creation and action-taking based on a customer's information repositories, code, and enterprise systems.

It introduced four new capabilities for AWS Supply Chain - AWS Supply Chain Supply Planning, AWS Supply Chain N-Tier Visibility, AWS Supply Chain Sustainability, and Amazon Q in AWS Supply Chain, designed to boost its existing data lake, demand planning, and ML-powered insights.

AWS’ introduction of AWS Graviton4 and AWS Trainium2, its next-generation two-chip families, might have contributed well.

The company also announced the general availability of Amazon Simple Storage Service (Amazon S3) Express One Zone, a new high-performance, single-zone Amazon S3 storage class.

It unveiled new Amazon SageMaker capabilities for scaling with models, including SageMaker HyperPod, SageMaker Inference, SageMaker Clarify and SageMaker Canvas.

All these efforts are expected to have helped AWS win customers. This, in turn, is expected to have boosted AWS’s fourth-quarter revenues, whose consensus mark is pinned at $24.32 billion, up 13.8% from the year-ago reported figure.
 

Smart Device Portfolio to Consider

Amazon’s robust Fire products family, portfolio of Echo smart speakers, Blink doorbells, and eero products are expected to have continued benefiting its financial performance in the fourth quarter. Additionally, strengthening Alexa features is likely to have aided Amazon in delivering a better user experience, which, in turn, is expected to be reflected in the upcoming results.

However, inflationary pressure, geopolitical tensions, and foreign currency headwinds might have remained concerns.
 

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Amazon this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. But that is not the case here, as you see below.

Amazon has an Earnings ESP of -0.04%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

AMZN has a Zacks Rank #2 at present.

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