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Amazon (AMZN) is scheduled to report results of its first quarter after the market close on Thursday, April 27, with a conference call scheduled for 5:30 pm ET. Here's what to watch for: 

EXPECTATIONS: For the first quarter, Amazon has said net sales are expected to be between $121B and $126B, or to grow between 4% and 8% compared with the same quarter of last year. The company expects to see anywhere from no operating income to $4B in Q1, compared with $3.7B in the same quarter of last year.

Current consensus EPS and revenue forecasts for Amazon's March quarter stand at 21c and $124.55B, respectively, according to data provided by Refinitiv. That EPS estimate is down from 27c, where it stood 90 days ago, Refinitiv data shows.

In a preview earlier this week, Piper Sandler said signs of leverage are emerging at Amazon. The company's unit growth exceeded shipping costs for the first time ever in the second half of 2022 and the CEO's shareholder letter suggests a change in tone and focus on driving operating leverage, the analyst told investors. The firm thinks Amazon can "surpass a low bar" on core retail in Q1, offsetting slowing Web Services growth. It reiterated an Overweight rating on the shares with a $123 price target.

Recently, Credit Suisse lowered the firm's price target on Amazon to $140 from $150 and kept an Outperform rating on the shares. The firm has modestly lowered its AWS growth expectation for 2023 in view of the ongoing cyclical headwinds. In line with what Credit Suisse has projected for Amazon's e-commerce business, the firm has assumed a cyclical recovery in Q1 2024, marking what should be a gradual reacceleration of revenue growth.

CLOUD: Last quarter, Amazon reported Amazon Web Services net sales of $21.38B, which was up from $17.78B in the same quarter of the prior year. AWS operating income declined to $5.21B from $5.29B in the prior year period.

On April 13, in his annual shareholder letter, Amazon CEO Andy Jassy stated: "AWS has an $85B annualized revenue run rate, is still early in its adoption curve, but at a juncture where it's critical to stay focused on what matters most to customers over the long-haul. Despite growing 29% year-over-year in 2022 on a $62B revenue base, AWS faces short-term headwinds right now as companies are being more cautious in spending given the challenging, current macroeconomic conditions. While some companies might obsess over how they could extract as much money from customers as possible in these tight times, it's neither what customers want nor best for customers in the long term, so we're taking a different tack. One of the many advantages of AWS and cloud computing is that when your business grows, you can seamlessly scale up; and conversely, if your business contracts, you can choose to give us back that capacity and cease paying for it. This elasticity is unique to the cloud, and doesn't exist when you've already made expensive capital investments in your own on-premises datacenters, servers, and networking gear. In AWS, like all our businesses, we're not trying to optimize for any one quarter or year. We're trying to build customer relationships that outlast all of us."

Subsequent to that, JPMorgan said it came away "incrementally positive" from Amazon's shareholder letter and range of generative artificial intelligence product innovations at its Web Services meeting. Andy Jassy's second letter as CEO provided the deepest insights yet into his vision and strategy for Amazon, as it touched virtually all key parts of the business and seemed to more directly address shareholder concerns, the analyst told investors. While macro pressures continue, the company's secular growth potential "remains strong" with 80% of retail still in physical stores and 90% of global IT spending on-premises, added the firm, which keeps an Overweight rating on the shares.

In a note published following Alphabet's (GOOGL) quarterly report, Evercore ISI said that it viewed Alphabet's ad revenue results as neutral to the internet advertising stocks, including Meta (META), and that it viewed Alphabet's and Microsoft's (MSFT) cloud results as neutral to internet cloud stocks such as Amazon.

JOB CUTS: On March 20, Amazon CEO Andy Jassy shared a message sent to Amazon employees, stating in part: "As we've just concluded the second phase of our operating plan this past week, I'm writing to share that we intend to eliminate about 9,000 more positions in the next few weeks-mostly in AWS, PXT, Advertising, and Twitch. This was a difficult decision, but one that we think is best for the company long term... As our internal businesses evaluated what customers most care about, they made re-prioritization decisions that sometimes led to role reductions, sometimes led to moving people from one initiative to another, and sometimes led to new openings where we don't have the right skills match from our existing team members. This initially led us to eliminate 18,000 positions (which we shared in January); and, as we completed the second phase of our planning this month, it led us to these additional 9,000 role reductions (though you will see limited hiring in some of our businesses in strategic areas where we've prioritized allocating more resources). Some may ask why we didn't announce these role reductions with the ones we announced a couple months ago. The short answer is that not all of the teams were done with their analyses in the late fall; and rather than rush through these assessments without the appropriate diligence, we chose to share these decisions as we've made them so people had the information as soon as possible. The same is true for this note as the impacted teams are not yet finished making final decisions on precisely which roles will be impacted."

Wedbush recently said it believes Amazon should continue to grow revenue through subscription expansion and its cloud and ads businesses. Nonetheless, Amazon's headcount reductions, which continued through April, may signal weakness in the core business, with management sending a signal to investors that it can manage expenses in tough times, the firm added. With that said, Amazon's workforce is quite large, suggesting that it can weather layoffs with little impact on revenue growth, driving corresponding margin increases throughout all of its business lines. Wedbush expects Amazon to hit its revenue and profit targets this quarter, but expects "wimpy guidance" for Q2. Longer-term, the firm believes that Amazon should benefit from margin expansion driven by the continued growth of its cloud and ads business and focus on cost control. Wedbush has an Outperform rating on the shares.

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