Amazon's Earnings Will Make or Break the Stock's Comeback

April 30, 2025 at 10:27 AM EDT

Amazon Prime box representing fast e-commerce logistics 13.09.2024 Europe, Poland. — Stock Editorial Photography

Shares of Amazon.com Inc. (NASDAQ: AMZN) closed just below $190 on Tuesday, continuing to stabilize and consolidate after a sharp correction. While still down more than 20% from February's all-time high, the stock has bounced roughly 16% off its multi-year low from earlier this month.

With earnings set to drop after the bell on Thursday, Amazon is shaping up to be one of the most closely watched names in the market this week. Volatility has calmed, technicals are improving, and analysts have been lining up throughout April to reiterate their bullish stance. The next 48 hours could determine whether the rally has real legs or if recent strength was simply a pause in a deeper trend.

Wall Street's Bullish Case Is Loud and Clear

Analysts have made their opinions known in the run-up to Amazon's Q1 report, and the consensus is nearly unanimous: this is a Buy. In the past week alone, firms like UBS Group and Oppenheimer reaffirmed their bullish ratings. That adds to calls from Goldman Sachs, Stifel Nicolaus, and others earlier this month, most of whom have set price targets well above current levels.

UBS' target stands out, calling for $253, implying a 30%+ gain from Tuesday's close. Even Oppenheimer, which trimmed its target to $220 to reflect tariff risks, remains firmly bullish. Across the board, analysts cite Amazon's scale, efficiency improvements, and growing AI presence as key long-term drivers.

Expectations Are Firm for Q1, Despite Headwinds

According to Wall Street consensus, Amazon is expected to report revenue of $155.1 billion, up 8% year-over-year, and earnings per share of roughly $1.36. Despite challenges ranging from foreign exchange headwinds to tariff disruptions, analysts are generally expecting solid growth from both retail and AWS.

Amazon management has already flagged a $2.1 billion FX headwind, as well as difficult comps from Q1 2023, which included an extra day thanks to the leap year. There are also concerns around tariffs, with some analysts suggesting that retail margins and average selling prices could be pressured moving forward.

Still, Amazon CEO Andy Jassy recently noted that consumer behavior hasn't shifted materially and that most third-party sellers are expected to pass tariffs through to buyers. That commentary, along with signs of stabilization in recent sessions, has kept sentiment surprisingly steady heading into earnings.

All Eyes on AWS and AI

One of the key questions for this quarter will be how Amazon Web Services (AWS) is performing and how much AI growth is contributing to the story. AWS remains Amazon's most profitable division, and it's expected to post 17% year-over-year revenue growth in Q1.

Investors will also be looking for updates on how Amazon is positioning itself within the broader AI infrastructure arms race. With other tech giants already reporting strong AI demand, Amazon is expected to reinforce its role as a key player in the space.

The Risk: Macro Uncertainty Still Lurks

Despite the bullish sentiment, not everyone is convinced the stock is ready to rip higher. Morgan Stanley still ranks Amazon as a Top Pick but flagged the rising number of macro uncertainties surrounding the business. They recently lowered some of their estimates, cautioning that visibility into the second half of 2024 remains murky.

Wells Fargo also pointed out that AWS has paused some international data center leasing discussions. While this is not seen as a red flag yet, it does reflect a more measured approach in the near term.

Earnings Report Could Be a Breakout Catalyst for Amazon

Amazon may still be trading well below its highs, but analysts are clear in their message: this stock is trading well below almost all its price targets ahead of an important earnings update. With improving technicals, a track record of consistent outperformance, and steady AI tailwinds, the current setup offers a compelling risk-reward profile.

If Thursday's report delivers as expected or simply avoids negative surprises, the recent bounce could accelerate quickly. However, Amazon may need more time to work through the noise if the company issues conservative guidance or confirms margin pressure from tariffs.

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