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What to expect from Amazon's third-quarter earnings

Amazon is rapidly evolving from the Everything Store to become the Everything Company, and analysts will be watching for growth across its diversified businesses in its third-quarter earnings. Analysts expect Amazon to report year-over-year growth of 21 percent on revenue of $24.9 billion and minus 12 cents earnings per share.

The company is far and away outperforming its peers. The stock is up more than 80 percent this year versus an average of about 9 percent among the top 10 biggest tech companies by market cap. The stock is up around 20 percent since the prior quarter, and expectations are high going into Thursday's earnings report.

Analysts point to several factors, but consistently highlight increasing Amazon Web Services adoption and Amazon Prime traction as driving forces.

Amazon began breaking out the AWS segment at the start of the year, revealing the strength of its business, and analysts will be watching growth rate and margins very closely. Bank of America Merrill Lynch is forecasting a growth rate of 78 percent year over year and $2.08 billion in revenue for the segment. "We view AWS as a transformational business and expect optimism on enterprise adoption to support the Amazon bull thesis," wrote analyst Justin Post.

Post expects AWS Q3 margins of 22 percent and points to the absence of a price cut to suggest upside to the fourth quarter continuing into next year. "Increasing customer traction and a less competitive pricing environment should support strong top line and enthusiastic investor sentiment (a $200 billion-plus long-term valuation potential)."

Read MoreRM: How Amazon wants to dominate enterprise tech

Following the AWS re:invent conference this month, where Amazon unveiled a slew of new products, most analysts are similarly bullish on AWS' potential. "We are confident that the AWS segment will be a significant contributor to Amazon's profitability going forward," wrote Nomura's Robert Drbul.

Of course, AWS currently makes up a small slice of the company's total pie. Post expects Amazon to report North American revenue of $14 billion and international revenue of $8.2 billion.

Amazon CEO Jeff Bezos is sizing up locations for its second US headquarters. Among the criteria: convenient access to mass transit and an international airport, a highly educated labor pool, a strong university system and a diverse population.
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Amazon CEO Jeff Bezos is sizing up locations for its second US headquarters. Among the criteria: convenient access to mass transit and an international airport, a highly educated labor pool, a strong university system and a diverse population.

Amazon Prime Day on July 15 — the company's counter to brick-and-mortar's Black Friday — added more Prime members than any day in history, and sales beat Amazon's biggest Black Friday. "We estimate contribution of at least $1.2 billion in incremental sales in a single day," writes Wedbush analyst Michael Pachter, who expects Amazon to post total revenue of $25.5 billion, above the Street's consensus estimate.

Mizuho Securities analyst Neil Doshi also expects Amazon to beat the Street consensus revenue estimate but says that looking beyond the numbers, Prime Day saw "mixed" success: "Sales surpassed the company's biggest Black Friday on record, but consumers were disappointed on deals."

Post notes that Amazon Prime's growth is due, in part, to heavy investment in the first half of the year. Pachter estimates that investment in original and exclusive video and Prime Music will drive content spending above $3 billion in 2015, and grow by $1 billion annually, slowing profit growth.

As CEO Jeff Bezos continues to launch new products and aggressively expand into new markets, analysts will be listening on the post-earnings conference call for any hints as to what industry he plans to attack next.

"We believe there are several currently identifiable categories that could provide opportunity," writes Piper Jaffray's Gene Munster. "Having said that, we are not naive enough to think that our team can exhaust Amazon's opportunities; we view Amazon's relentless focus on diversification, growth and structurally changing how the world works as intangible and difficult to value, but also as reason for long-term optimism."

Baird Equity Research's Colin Sebastian says there is evidence Bezos is eyeing expansion into the global logistics business, an industry Sebastian said Amazon already has huge advantages, and represents a $400 billion to $450 billion incremental market opportunity.

"Amazon has 'powerhouse potential' in the large transport and logistics market, dominated by global enterprises such as DHL and UPS," writes Sebastian. "Just as Amazon leverages infrastructure behind the core retail business to grow AWS and Marketplace, there is evidence the company may extend its increasingly complex and technology-centric logistics and delivery platform as a third-party offering."