Amazon is expected to show another huge jump in profits when it reports third-quarter earnings after Thursday's closing bell, despite heavy investments ahead of the holiday season.
The company is expected to report third-quarter profit of $3.09 per share, or roughly $1.5 billion, according to FactSet. That would be up from the 52 cents per share reported a year earlier, and the fourth straight quarter that Amazon has topped $1 billion in profit — a remarkable milestone for a company once known for losing money because of its heavy investments.
The widening profits are largely driven by the growth of Amazon's high-margin businesses, including its cloud, advertising and third-party seller services. Investors will keep a close eye on how those business units performed in the third quarter.
"Focus will likely remain on the strength of Amazon's high margin business lines that are now driving robust margin expansion," Evercore analyst Anthony DiClemente wrote in a note published earlier this month.
Here's what Wall Street is expecting, based on a FactSet consensus:
The third quarter included Prime Day, one of Amazon's biggest sales days of the year. Despite facing major glitches across its site, Amazon announced that this year's Prime Day had record sales, becoming the largest shopping event in company history.
It also unveiled a bunch of new hardware devices during the quarter, including an Alexa-powered microwave and home audio systems, although many of the products did not go on sale during the quarter. With Whole Foods, Amazon continued to expand its grocery delivery service, which is now available in over 60 cities.
A minimum wage hike for its hourly workers, which was announced earlier in October, will not be included in the third-quarter results because it goes in effect on Nov. 1. Investors will look to fourth-quarter guidance to see what kind of impact the wage increase will have on Amazon's overall business.
Here are some of the most important topics that could get discussed during the earnings call:
On Wednesday, Amazon shares lost nearly 6 percent amidst a broad market sell-off during normal trading, but recovered about 1.5 percent after hours following solid earnings reports from tech bellwether Microsoft and techcentric carmaker Tesla. Amazon was up 1.9 percent in Thursday's premarket.