Amazon earnings preview: Here's what to expect

Amazon (AMZN) will report its Q1 2023 earnings Thursday after market close.

Investors are looking for updates on the e-commerce giant's cost-cutting efforts, an upward trend for retail margins, and a solid showing from cloud division Amazon Web Services, or simply AWS.

Here are the key numbers that Wall Street's expecting to see from Amazon this quarter, according to data compiled by Bloomberg:

Net sales: $124.7 billion

EPS: 20 cents

AWS net sales: $21.03 billion

Operating margin: 2.38%

Q2 net sales guidance: $130.1 billion

AWS will be a point of focus for investors. Both Alphabet (GOOG, GOOGL) and Microsoft (MSFT) bucked worries about a cloud slowdown earlier this week, dialing up the pressure on AWS to deliver. Google Cloud hit a milestone, clocking profitability for the first time, and Microsoft, leaning on its AI prowess, talked Wall Street into forgiving that Azure's growth has been declining every quarter since at least Q3 2022.

So, AWS may or may not stack up on Thursday, but it's possible that AWS weakness is also already priced into Amazon, according to UBS analyst Lloyd Walmsley, who has the stock rated at a Buy with a price target of $125.

Hagerstown, MD, USA. Image of an Amazon packages. Amazon is an online company and is the largest retailer in the world."We remain constructive on AMZN shares over a 12-month view and think that line of sight to an eventual AWS stabilization is the focus among investors," he wrote on April 24. "We do not expect to get that this [quarter]. But sentiment is so weak and we think investors expect continued weakness already."

Additionally, updates on retail margins and "broader context" on cost-cutting will be important topics on the company's earnings call, as will how the company is "positioned for Generative AI for AWS or otherwise," Walmsley noted.

Amazon has announced plans to lay off a total of 27,000 employees over the last few months. On Wednesday, the company reportedly fired off a round of layoffs hitting both HR and at AWS. Previously, the company conducted layoffs in highly-visible segments of the business such as Alexa and gaming.

Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and on LinkedIn.

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