After spending $800 million in recent months to speed up package delivery, Amazon is seeing some signs of growth acceleration, at least from the first quarter.
In Amazon's second-quarter earnings report, set to hit after Thursday's closing bell, analysts expect revenue of $62.5 billion, up 18.1% from the year-earlier period, according to Refinitiv's analyst consensus estimates. That would be an improvement from 16.8% in the previous period, which was Amazon's slowest expansion in four years.
At well over $200 billion in annualized revenue, Amazon is already the fifth-biggest U.S. company by sales. It also commands the second-highest market cap. With that kind of scale, growth typically becomes hard to find. But Amazon is anything but typical, having poured money into physical stores, electronic devices, original Hollywood content and the massive cloud-computing operation that makes up Amazon Web Services.
To get more juice out of its core retail operation, Amazon said in April it expected to spend $800 million in the second quarter improving warehouses and delivery infrastructure as part of a plan to make one-day shipping the standard for Prime members. Analysts predict that shorter delivery times will lead to more frequent purchases.
It's just the latest example of CEO Jeff Bezos' willingness to sacrifice profit margins for growth.
"Investments in one day shipping should help top line growth rebound," analysts at Canaccord Genuity wrote in a note this week. "We look for lower margins but concurrently expect a growth re-acceleration that we think can keep the stock in favorable territory."
Amazon shares have climbed 33% this year, outpacing the 20% gain for the S&P 500.
Here's what Wall Street is expecting for the quarter:
Still, investors are keeping a close eye on how much Amazon's heavier investment will weigh on profitability, which has reached record levels because of AWS. In the first quarter, Amazon reported $3.6 billion in net income and operating profit of $4.4 billion. Its operating margin rose to 7.4% from 3.8% a year earlier. During last quarter's earnings call, Chief Financial Officer Brian Olsavsky hinted the company's profits could take a hit this year because it expects to get back into an investment cycle following a slower spending period.
"We are cautious on [operating income] for 2Q and 2019 in general based on management's commentary that this year will return to normal pace of investment," analysts from Barclays wrote in a note earlier this month.
Here are some of the main topics analysts expect to hear about on Thursday's call: