Amazon Q2 preview: investors eye revenue, cloud growth and retail margins

economictimes.indiatimes.com:

Amazon investors are looking for updates on the tech giant's cloud business, ad revenue growth and signals on consumer health heading into the holidays as inflation continues to impact spending for corporations and consumers. Investors want to know how Amazon Web Services (AWS), the company's cloud provider, stands up against Microsoft and Google's, which both on Tuesday reported slowed growth in their cloud businesses in the quarter ending in June 30.

Amazon previously said it is seeing a decrease in growth in AWS as business clients reallocated their spending to reduce costs. «There is potential for cloud computing, including Microsoft's Azure, Google Cloud and AWS, to materially benefit from companies interested in artificial intelligence,» said Tom Forte, a senior research analyst at financial firm DA Davidson Companies.

However, as consumers overall pullback on spending, companies invested in AI and cloud tools are forced to reconsider their expenses, which will influence cloud computing growth, Forte said. Amazon chief financial officer Brian Olsavsky said during its first-quarter call in April that he expects the tech and retail giant's cloud business to slow as its enterprise clients became more «cautious in their spending.» Investors are also looking to see how Amazon's advertising business intersects with more language models and generative AI.

The company's advertising business was seeing «robust growth» due to its machine learning investment, chief executive Andy Jassy said in the first-quarter earnings call. Investors will also compare Amazon's ad business with Google, which on Tuesday reported a 3.3% increase in advertising revenue to $58.1 billion despite a broader advertising pullback.