Amazon's Q3 Revenues: A Critical Period for AWS!

Amazon (AMZN) will announce its third-quarter earnings on Wednesday evening. The tech giant is trying to prove to investors that AWS is as strong an artificial intelligence hub as Microsoft's Azure and Google's Google Cloud Platform.

This announcement follows Reuters' report on Amazon's plans to cut 30,000 corporate jobs.

Amazon shares have only increased by 2.3%, lagging behind Microsoft's 24% and Google's 37% gains. This situation is linked to the perception that AWS has not been able to capture as much of the artificial intelligence market as its competitors.

Microsoft considers OpenAI one of its most important artificial intelligence clients, while Google stands out with Gemini. Amazon is relying on Anthropic for its large artificial intelligence presence, which is also shared with Google. Last week, Anthropic signed a multi-year, multi-billion dollar deal with Google to use 1 million Google TPUs (tensor processing units) to bolster its artificial intelligence services.

Despite launching the Bedrock platform to accelerate customer reach, investor perception is developing in favor of Microsoft and Google.

KeyBanc Capital Markets analysts stated, "Other cloud providers are receiving more credit for their contributions to artificial intelligence." They added, "AWS is lagging in revenue growth percentage compared to peers. While we believe this is largely a scale issue, Amazon is perceived to be losing market share." Analysts noted that the year-to-date price performance reflects this situation in comparison to peers.

For the third quarter, Amazon's earnings per share (EPS) is expected to be $1.58, with total revenue estimated at $177.8 billion. In the third quarter of last year, the company reported $1.43 EPS and $158.9 billion in revenue.

AWS is projected to generate $32.4 billion this quarter, an 18% increase compared to $27.5 billion in the same quarter last year.

Despite the market perception, Wedbush analyst Scott Devitt suggested that better days could lie ahead for Amazon. He shared a note stating, "We find the setup favorable ahead of the report due to positive comments on AWS growth, healthy trends in the core retail business, and strong advertiser demand."

The e-commerce giant's online sales are expected to reach $67 billion in the third quarter, while its advertising business is projected to generate $17.3 billion. This reflects improvements of 9% and 21%, respectively.

However, as artificial intelligence continues to be a focal point on Wall Street, investors will pay special attention to Amazon's AWS results.