Wall Street expects smaller profit from Amazon, but still plenty of growth

Key Points
  • Wall Street expects Amazon to report a drop in profit due to investments in warehouses, content and international markets.
  • Sales are expected to rise 27 percent to $41.6 billion, with AWS revenue growing 4 percent.
Jeff Bezos, chief executive officer of Inc.
Mike Kane | Bloomberg | Getty Images

Wall Street expects Amazon to report another quarter with plenty of growth but little profit, as the e-commerce giant ramps up its investment in areas like warehouses, content, and international markets.

Amazon is expected to post third-quarter earnings of 3 cents a share after the bell Thursday, according to analysts polled by Thomson Reuters, down from 52 cents a year ago. Revenue is projected to increase 27 percent to $41.6 billion from $32.7 billion. Meanwhile, Goldman Sachs analysts expect operating expenses at Amazon to jump 40 percent to $15.3 billion.

Here are the topics that will likely be of greatest interest to investors on the earnings call:

  • Whole Foods impact: After the Whole Foods deal closed in late August, Amazon cut prices on select items in the stores. Investors will want to to know what's next. Cowen & Co. estimates up to $1.5 billion in additional revenue from the acquisition in the quarter.
  • AWS growth: Growth has slowed in recent quarters and Amazon's continued to slash prices, but analysts still expect a 41 percent increase in sales. GBH Insights sees AWS's revenue growth accelerating in the fourth quarter.
  • Emerging revenue opportunities: Amazon has launched a number of new Echo devices and continues to see strong demand from its advertising business. There have also been reports about new delivery services. "We are more bullish than ever on some of the emerging businesses around advertising, hardware and logistics," Macquarie Research wrote in a note.
  • HQ2 and Prime Day: Investors will likely ask about the reason for building a new headquarters and for additional details on July's Prime Day.