'Christmas comes early with Prime Big Deals Days': Here's what Wall Street expects from Amazon's 3rd-quarter earnings report

• Amazon is set to report its earnings for the third quarter after the closing bell on Thursday.
• Investors are eyeing the results of Amazon's Prime Big Deal Days event.

Investors have their eye on Amazon as they wait for the retail giant to report third-quarter results on Thursday after the closing bell.

In focus will be the results of Amazon's Prime Big Deals Days event, as well as guidance for consumer spending during the holidays. Investors are also looking out for the revenue pulled from Amazon's cloud business, AWS, after tempering their expectations for AWS revenue growth over the past few months.

Amazon, though, has enjoyed a so-far strong performance this year. Its stock is up nearly 50% from levels in January, partly fueled by Wall Street's excitement for AI, as well as Amazon's blowout second quarter earnings report, which saw net sales surge to an above-expected $131.34 billion.

Here's what Wall Street is expecting from Amazon's financials over the past quarter, per Bloomberg data:

• Revenue: $141.56 billion
• Earnings per share: $0.58

Here's what Wall Street analysts are saying about Amazon ahead of its highly-watched earnings report.

Bank of America: Third quarter sales could come in strong

The Seattle-based retailer could beat third quarter earnings expectations, given that consumer spending is still robust. Online shopping was up 1% year-over-year over the third quarter, according to Bank of America credit and debit card data, a trend that could continue through the end of the year.

"As for 4Q, Big Deal Days data points seemed strong, and we think holiday hiring (+250k) signals still-strong demand," the bank said in a note.

Bank of America reiterated its "Buy" rating with a $174 price target, representing potential upside of 35%.

Goldman Sachs: Retailer faces rising competition and energy costs

Revenue for Amazon Web Services likely was stable over the past quarter, Goldman Sachs said, according to cloud computing industry checks analysts performed through September.

"We model stable AWS revenue growth in Q3 over Q2 (at 12% YoY) and reacceleration in Q4 (+14% YoY) on easier comps, a lower pace of optimization, and growth in new workloads.

Still, the company faces a handful of possible headwinds, including new competition from eCommerce platforms like Temu. Energy prices have also soared in recent months, which could eat into profit margins as Amazon manages its physical stores and its AWS business.

"We believe that each +10 increase in energy costs could result in a $200-$300mm headwind to Q3 EBIT," analysts said, referring to Amazon's earnings before interest and taxes.

Goldman Sachs reiterated its "Buy" rating but lowered its price target to $175 a share, representing potential upside of 36%.

JMP: "Christmas comes early with Prime Big Deal Days"

Online sales likely surged through Amazon's Prime Big Days. Already, the company has reported over 150 million items being sold during the 2-day event, JMP strategists noted.

"While we are impressed with the success of AMZN's Prime Big Deal Days event, we do not view it as a material incremental benefit to revenue but rather an elongation of holiday spending, Still, we believe driving higher 3P sales, increasing utilization of its fulfillment network, and stretching out the holiday season may provide upside to margins in 4Q," strategists added.

JMP rates Amazon at "Buy" with a $175 price target, representing potential upside of 36%.

Jefferies: "We see runway for continued margin improvement"

AWS profits are set to pick up, as cloud optimizations are winding down while AI demand is ramping up. That supports an acceleration in Amazon's AWS business, Jefferies said.

"We believe AWS Net Sales expectations have bottomed and expect to see continued positive estimate revisions drive the story higher as cloud cost optimization headwinds fade and AI-driven workloads support new migrations," analysts said in a note last week.

Jefferies rates Amazon at "Buy" with a $175 price target, representing potential upside of 36%.

JPMorgan: Expect retail growth uptick

JPMorgan expects healthy profits through the second half for Amazon. That's largely supported by the strong American consumer, with traction gaining in areas like grocery, clothing, and furniture. The bank also expects AWS growth to accelerate through the second half.

"We project +8.2% Y/Y US e- comm growth in 2023, along with online penetration of total retail at 21.9% (+90bps Y/Y). Long-term, we continue to believe US e-commerce penetration of adj retail sales could double from 21% currently to 40%+," strategists said in a recent note.

JPMorgan rates Amazon at "Buy" with $180 price target, representing potential upside of 40%.