A preview in one image | Amazon's performance will be revealed this week! AWS and Advertising Business remain the growth engines, and capital expenditure may become the focal point of market attention.

$Amazon (AMZN.US)$Results will be released after the market closes on February 6, Eastern Time.Institutions generally expect Amazon to achieve revenues of 187.25 billion USD in Q4 2024, an increase of 10.17% year-on-year; EPS is expected to be 1.49 USD, an increase of 48.51% year-on-year.

This year, Amazon's stock price has shown an overall trend of volatility and upward movement, with a cumulative increase of 8.34% within the year, reaching a historic high at one point.

Looking ahead to the fourth quarter, market attention remains focused on Amazon's two major engines – AWS Cloud Computing Service and advertising business. Additionally, with DeepSeek impacting the global market, capital expenditure has also become a focal point for the market.

– AWS Cloud Computing Service:

The AWS cloud business is the most-watched item by the market for Amazon.The market expects AWS to continue being Amazon's core growth driver.Analysts predict that revenue in the fourth quarter will grow by 19%-20%. Jefferies pointed out that strong demand for generative AI and the accelerated shift of business to the cloud are key driving factors for AWS revenue growth.

Furthermore, there are market views that believe Amazon's expansion of project investments and increased collaboration with AI companies, along with Trump's $500 billion investment plan for Datacenters, is driving growth for Cloud Computing Service providers.AWS's subsequent growth is set to accelerate, driving an increase in Amazon's overall profit margins and valuations.

– Advertising Business:

Amazon's advertising business is regarded as one of its most promising growth areas. The market expects fourth-quarter advertising revenue to grow 19%-21% year-on-year, surpassing competitors like Google and Meta.The high profitability nature of the advertising business makes it an important revenue source for Amazon.Especially as advertising integrates into Prime Video and retail advertising demand continues to grow. Barclays Analysts believe that advertising revenue can further improve the company's overall profit margins.

Amazon's advertising business has recently been a strong growth driver (third-quarter revenue grew 18.8% year-on-year). This has brought significant improvements in the company's profitability.And it is very likely to maintain this momentum in the fourth quarter.

In addition,Strong consumer spending during the holiday season is expected to significantly boost Amazon's e-commerce revenue.According to data from Adobe Analytics, it is expected that online sales in the USA during the holiday season of 2024 will grow by 6.1% year-on-year.Amazon is expected to capture nearly 40% of the market share.

Analysts expect Amazon's 'Prime Big Deal Days' to perform strongly, and with its increasingly efficient delivery service, the company is expected to make significant revenue contributions during the holiday season.

Jefferies expects Amazon's Q4 performance to exceed market expectations, primarily benefiting from strong growth in AWS and advertising business.Analysts anticipate that holiday season sales will drive total revenue to new heights.

– Capital expenditure

Regarding capital expenditure,Amazon expects its Q4 capital expenditure to be $23 billion and $75 billion for the whole year, with more than half related to AWS.Amazon executives also stated that the ROI on capital expenditure related to AI is very high, and it is necessary to seize early investment opportunities to build robust AI infrastructure, which can yield multiple returns during the boom period.

Morgan Stanley pointed out that Amazon's capital expenditure this year may reach a level of $95 to $100 billion, with an increased investment in datacenters, GPUs, servers, and energy storage and generation, paving the way for its AI and cloud business development, and maintaining its leading position.

How did the stock price perform on historical earnings days?

Currently, Amazon's implied volatility is±6.7%This indicates that the Options market is betting on a single-day fluctuation of 6.7% after performance; in comparison, Amazon's average stock price change after performance over the last four quarters was±7.3%This shows that the current Options value of the stock isUnderestimated。

From the perspective of Options volatility skew, market sentiment regarding Amazon's future trendsSlightly bearish。

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