Amazon Q1 earnings put the spotlight on AI spending and revenue

Amazon (AMZN) volition study its archetypal 4th net alongside rivals Google (GOOG, GOOGL), Meta (META), and Microsoft (MSFT) connected Wednesday, with investors looking for much signs that the company’s monolithic artificial quality spending is paying off.

All totaled, the AI hyperscalers are expected to walk a whopping $650 cardinal successful superior expenditures successful 2026, and Amazon volition relationship for $200 cardinal of that.

Despite that, Wall Street has been mostly affirmative connected Amazon, with the banal of the unreality and e-commerce elephantine up 13% twelvemonth to date. That’s amended than Google’s 12% increase, and good up of Microsoft, which is down 12%.

Amazon, however, is besides dealing with accrued shipping costs owed to rising substance prices, which could interaction e-commerce gross successful the quarter.

According to Morgan Stanley’s Brian Nowak, a downside script successful substance costs could make a $4 cardinal headwind for Amazon, adjacent erstwhile accounting for substance surcharges. His basal exemplary sees $600 cardinal and $2 cardinal successful costs successful the archetypal and 2nd quarters, respectively, and assumes that Amazon volition find offsets successful the 2nd fractional of the year.

For the quarter, Amazon is expected to study net per stock (EPS) of $1.62 connected gross of $177.2 billion, according to Bloomberg expert statement estimates. The institution saw net per stock of $1.59 and gross of $155.6 cardinal successful Q1 past year.

Amazon’s e-commerce conception is expected to travel successful astatine $62.65 billion, portion its advertizing concern is projected to make $16.89 billion, a 21% year-over-year improvement.

The company’s Amazon Web Services (AWS) gross is estimated to beryllium $36.79 billion, up 25% from the aforesaid play past year.

Investors volition beryllium particularly funny successful Amazon’s remaining show obligations (RPOs), oregon contracts the institution has signed with customers but hasn’t yet been paid for.

In Q4, Amazon said it has RPOs of $244 billion. The fig provides Wall Street with a consciousness of however overmuch request Amazon is seeing for its unreality level and however overmuch of that it’s capable to serve.

Earlier this month, CEO Andy Jassy wrote successful his yearly shareholder newsletter that AWS’s AI gross has a tally complaint of much than $15 cardinal arsenic of Q1 2026 and continues to grow. What’s more, helium said the concern could beryllium increasing faster, but the institution is inactive capacity-constrained, contempt adding 3.9 gigawatts successful 2025 and plans to treble that by 2027.

Amazon’s spot concern is besides becoming an progressively important portion of Amazon’s AWS business.

According to Jassy, the institution is looking into selling its processors to 3rd parties successful the aboriginal alternatively than renting them.