Amazon (AMZN) is set to report its third-quarter earnings tomorrow, October 30, and the options market is expecting a volatile reaction. Based on options pricing, traders are expecting a 6.74% move in either direction, following the results. This is much higher than AMZN’s long-term average post-earnings move of -0.75%, which reflects a modest decline.
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The options market’s implied move reflects high expectations about the e-commerce and cloud giant’s performance amid huge AI investments.
What to Watch in Amazon’s Earnings
Investors are likely to watch for three main things in Amazon’s upcoming earnings. First, the performance of its cloud business, AWS (Amazon Web Services), especially as AMZN’s earnings report follows other tech giants such as Microsoft (MSFT), Alphabet (GOOGL), and Meta (META).
While cloud revenue growth has slowed, Amazon’s AI infrastructure push, including $75 billion in capital spending for FY25, might have provided support.
Secondly, Amazon’s ad business was a bright spot in Q2, posting strong year-over-year growth. Continued strength in this unit could help offset weakness in retail margins.
Lastly, with inflation cooling but discretionary spending still under pressure, traders are looking for signs of resilience in Amazon’s core e-commerce business.
Analysts’ Expectations from AMZN’s Q3 Results
Wall Street is expecting Amazon to report earnings of $1.57 per share, up 10% from the same period last year. Also, analysts project revenues of $178 billion, up from $158.88 billion in the year-ago quarter.
Ahead of the earnings, UBS analyst Stephen Ju raised his price target on Amazon stock to $279 from $271 while keeping a Buy rating. He expects some impact to Q3 operating income due to the $2.5 billion Prime settlement with the FTC, but said his updated forecast still falls within the company’s guidance range of $15.5 billion to $20.5 billion.
The five-star analyst also slightly raised his estimates for Amazon’s first-party and third-party sales gross merchandise volume, as well as advertising, for 2025 through 2027. He believes investors will be focused on AWS growth, which is expected to rise around 18% year-over-year.
Interestingly, he sees potential for cloud growth to accelerate in late 2025 and into 2026 as Amazon adds more capacity through its Project Rainier.
What Is the Price Target for Amazon Stock?
Currently, Wall Street has a Strong Buy consensus rating on Amazon stock based on 41 unanimous Buys. The average AMZN stock price target of $269.24 indicates a 16.47% upside potential from current levels.
