Inc. (AMZN), which fell 34% off its highs last year, has recouped nearly all of those losses in 2019 and is within striking distance of regaining its $1 trillion market value. Whether Amazon rises higher may be determined by whether it reports robust first quarter earnings growth and solid revenue gains, as expected by analysts, after the close of trading on Thursday. The shares are still trading below their all-time high. Investors will be paying attention to several key metrics and announcements tomorrow, as summarized in the table below.

What To Watch For In Amazon's Earnings

  • If sales growth will speed up after a very weak Q4
  • Health of core e-commerce business
  • Amazon’s fast-growing, high-profit cloud segment
  • Advertising sales growth
  • Second quarter and 2019 guidance

Source: Investopedia

Amazon's Q1: What to Expect

In Q1 ended March, analysts expect Amazon to report that earning per share rose by 41% to $4.61 from $3.27 a year earlier, per Nasdaq data. Amazon guided for revenue between $56 billion and $60 billion in Q1, and for operating income of $2.3 billion to $3.3 billion, representing growth of 21% to $74% YOY.

When Amazon posted its Q4 results for the period ended December 2018, the e-commerce giant exceeded the consensus estimate by 8.8%, per Nasdaq, and revenue came in above estimates at $72.4 billion, per Refinitiv. Cloud computing was particularly strong, with $7.43 billion in sales.

Slowest Sales Growth in 3 Years

Despite beating expectations, Amazon shares dipped in January on weaker-than-expected Q1 revenue guidance. While revenue grew 19.7% in Q4, faster than the 18.8% expected, investors have been concerned about decelerating growth because latest quarter marked the slowest sales increase since Q1 2015.

For Q1, investors will be keeping a close eye on whether Amazon can maintain strong growth for its high-margin cloud service, Amazon Web Services (AWS), which grew revenue by 45% in the December quarter. Another focus will be the rapidly expanding advertising business, which is threatening to steal market share away from the long-ruling duopoly of Facebook and Alphabet Inc. (GOOGL).

Loop Capital Markets analyst Anthony Chukumba is particularly bullish on Amazon ahead of Thursday’s report, reiterating a buy rating and $2,220 price target, as outlined by Barron's. He expects EPS to come in at $4.78, driven by a 40% jump in AWS sales and Amazon’s new advertising business.

Looking Ahead

While Amazon’s upcoming report will offer investors insight into the health and growth of both its core retail segment and growth businesses, the most attention will likely go to second quarter guidance. In Q2, analysts are expecting EPS to rise nearly 25%, per Yahoo Finance.