Citi analysts project that Amazon's (NASDAQ:AMZN) second-quarter 2024 results, set to be announced on Thursday, August 1, will surpass consensus expectations for both revenue and operating income.
"We believe Amazon's 2Q24 results are likely to be better-than-consensus expectations across both revenue and Operating Income," Citi stated.
The positive outlook is driven by accelerating AWS demand and expanding profitability.
A key factor in Amazon's anticipated outperformance is the growth in AWS revenue. Analysts highlighted the impact of generative AI (GenAI) on AWS, stating, "Given GenAI tailwinds, we believe AWS revenue growth likely accelerated in 2Q."
The note also pointed to improved efficiencies in Amazon's retail segment and strong advertising demand as contributors to the company's robust operating income, which is expected to exceed the high end of guidance.
Despite concerns about a more challenging environment for low-end consumers, faster delivery times have boosted conversion rates, according to the bank.
Analysts also noted the success of Prime Day, stating, "Our analysis of Prime Day suggests another successful event." This success is reflected in record sales and new Prime member sign-ups, with Prime Day generating $14 billion in sales for U.S. retailers, an 11% year-over-year increase according to Adobe Analytics.
Citi remains bullish on Amazon, reiterating its Buy rating and a target price of $245. The firm projects 17.5% year-over-year growth in AWS for Q2 and operating income of $13.88 billion.
Looking ahead, Citi anticipates Amazon's Q3 revenue guidance to range between $156 billion and $161 billion, with operating income between $14 billion and $18 billion.
In conclusion, Citi's analysis suggests that Amazon is well-positioned to exceed earnings expectations, driven by strong performance across AWS, retail, and advertising segments.