Amazon (AMZN) is set to report its earnings on July 30, with Wall Street expecting revenue of around $197 billion, well within the company’s own guidance and up 17% year-over-year (YoY). For many analysts, it is AWS that is the center of attention. The segment is expected to report a growth of 32% on the back of huge AI infrastructure demand. Cloud backlog had already jumped to $364 billion in the last quarter and is likely to rise again. The company’s custom Silicon business is firing on all cylinders, growing nearly 40% quarter-over-quarter (QoQ) and helping the company reduce its reliance on Nvidia (NVDA). In the long run, this also helps boost its margins. The company’s ads business is also nearing $79 billion in annualized revenue, and considering it is an extremely high-margin part of the business, it cannot just be treated as a small part of the overall business.
Yet none of the above is what investors are looking at when they wait for the quarterly numbers after market close on July 30. As with all the hyperscalers, all eyes are on the capex figure. In my view, even though people are looking at the right thing, they are looking at it through the wrong lens. Whether the capex rises or not hardly matters in the grand scheme of things. What matters is the cash flow trajectory. All hyperscalers are closing in on negative free cash flow, and that is therefore something the market has already priced in. What it hasn’t priced in is how fast each company can recover.
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Amazon has a history of bouncing back from negative free cash flow scenarios. It did so in 2010 and 2011 when it invested heavily in AWS (the same segment that is still growing at over 30%). It did so post-pandemic to service the huge e-commerce demand. Now it is doing the same thing again to build its AI infrastructure. Granted, it's much more costly than the previous spending cycles, but so are the rewards. The in-house custom silicon business, for instance, is likely to get even bigger and improve the company’s margins in the future. For now, the company is busy laying out cash for land, power, chips, and servers, often required up to 24 months before customers can be billed. Investors are looking at the beginning of this period; that’s when those waiting for the reward cycle to begin will enter the stock. On the earnings call, investors will be looking at any hint that points towards the company starting to generate a return on its investments. It will definitely come; investors just want to know when.
About Amazon Stock
Amazon is a global technology and e-commerce company. It operates in three main areas. This includes online retail, cloud computing, and digital services. The company sells products online and in stores while allowing third parties to sell their products on its platform. Amazon offers subscription services such as Amazon Prime and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Echo smart speakers, Ring, Blink, and Eero networking equipment. Founded in 1994, the company is headquartered in Seattle, Washington.
Over the last 12 months, AMZN stock is down 0.7%, significantly lagging the S&P 500 Index ($SPX), which saw a 16% gain in the same period. The underperformance is mainly due to investors' concerns about the stock’s long-term returns. The company’s heavy AI-related capital spending of more than $200 billion during 2026 has further increased investor concerns for the near term.
www.barchart.com Amazon Stock Earnings
Amazon announced its Q1 fiscal 2026 earnings report on April 29. The company reported revenue of $181.5 billion, up 15% year-over-year (YoY). The reported revenue comfortably beat the Wall Street estimates of $177.13 billion. The earnings per share came in at $2.78, which exceeded analyst estimates of $1.63. The strong performance highlights the company’s ability to capitalize on its strategic investments and operational efficiency.
Going forward, AMZN projects continued growth with a focus on expanding its AI and cloud services. The company expects Q2 net sales to be between $194 billion and $199 billion. The operating income is expected to be between $20 billion and $24 billion. However, within the North America segment, the company expects a YoY cost increase of approximately $1 billion related to Amazon Leo. The management was asked about the broader AI demand and internal AI use, to which President, CEO & Director Andy Jassy said companies are seeing the biggest benefits from AI through cost savings and productivity improvements. He also highlighted that AI is having a significant impact on Amazon’s business.
What Are Analysts Saying About AMZN Stock?
On July 22, Bank of America Securities analyst Justin Post reiterated a “Buy” rating on Amazon. The analyst also assigned a target price of $310. The firm’s “Buy” rating is backed by a combination of factors, notably stronger-than-expected AWS momentum and solid overall revenue growth. The firm believes sales and operating profit to be above consensus. Moreover, strong demand for AI services, including Anthropic’s models and OpenAI models available through Amazon’s Bedrock, will help AWS growth accelerate to roughly one-third YoY.
According to 57 Wall Street analysts with coverage, AMZN stock has a consensus “Strong Buy” rating. Out of those analysts, 49 have a “Strong Buy” rating, five have a “Moderate Buy” rating, and three have a “Hold” rating. The mean target price of $315.25 reflects an additional 36% upside from the current share price.
www.barchart.com On the date of publication, Jabran Kundi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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