If Amazon earnings are a blockbuster, these stocks and ETFs could also get a jolt

Amazon (NASDAQ:AMZN) is scheduled to report earnings on August 1. Analysts expect revenue of $148.6 billion and EPS of $1.02 to be disclosed. Consensus estimates also include an operating profit of $13.7 billion and adjusted EBITDA of $32.1 billion to be delivered by the Seattle-based company. The AWS segment is forecast to generate $25.9 billion of revenue (+17.2% Y/Y) all by itself, while the advertising services segment is expected to tally $13.0 billion (+21.1% Y/Y).

During the earnings call, traders may be looking for tidbits on the anticipated financial impact of the Prime Day event that will be included with Q3 results.

Morgan Stanley thinks Amazon (AMZN) needs to see the AWS business grow by at least 18% to show some momentum and build credibility with investors of AWS’ Generative AI positioning and its ability to generate high teens’ growth through a heavy capex investment period.

Bank of America anticipated Amazon (AMZN) will top earnings expectations, with the new 3P fee and the Prime Ad ramp seen as margin boosters. The firm warned that the biggest risk to the margin guidance is higher freight costs and the propensity to bring new fulfillment capacity online in Q3 ahead of the holidays. In terms of valuation, analyst Justin Post and his team see Amazon’s (AMZN) 30.7X 2025 GAAP EPS trading multiple as reasonable given the expectation for 27% two-year GAAP earnings growth CAGR.

Heading into Amazon (AMZN) earnings day, Wedbush Securities said it is focused on retail segment performance and continued market share gains. Analyst Dan Ives is also looking for rising operating margins supported by the mix shift to higher margin revenue, as well as accelerating AWS growth and emerging AI monetization. Showing confidence ahead of the report, Wedbush kept its prior estimates and $225 price target on Outperform-rated Amazon.

Jefferies is also still bullish on Amazon (AMZN) into the earnings report. Analyst Brent Thill had his eyes on the EBIT line. “Consensus implies a 14% beat to mid-pt of EBIT guide, which is well below the 74% avg. since 4Q20, and matches the lowest beat from 3Q21 other than the sole 18% miss in 1Q22,” he noted. Thrill reminded investors that Amazon (AMZN) is usually conservative with EBIT guide. “Positive mix effect from faster growing and higher-margin AWS and Advertising, along with continued gains in ecommerce fulfillment optimization, should allow AMZN to extend its harvest mode,” he highlighted.

Of course, Amazon (AMZN) is one of the most well-liked megacaps stocks traded on the U.S. market, with 59 out of 61 firms covering the company having it slotted at Buy-equivalent or higher. Amazon (AMZN) has also topped EPS estimates for five quarters in a row, beating the consensus estimate by an average of 35%. Amazon (AMZN) also topped revenue estimates in five straight quarters, by an average of 2.2% over the consensus mark. Options trading implies a share price of 7% after Amazon (AMZN) drops its earnings report. The e-commerce stock gained 2.3% after its Q1 report.

On Seeking Alpha, analyst Dividend Sensei listed three reasons Amazon (AMZN) should be purchased before earnings and Oliver Rodzianko had a deep dive on the long-term upside from Amazon’s (AMZN) increasing automation.

Retail and tech watch

Amazon (AMZN) casts a big shadow in the retail sector. Stocks that correlate the tightest to Amazon (AMZN) during the week after its earnings report are Costco (COST), Walmart (WMT), MercadoLibre (MELI), Maplebear (CART), and Wayfair (W). Of note, Target (TGT) and Dollar General (DG) have a negative trading correlation with Amazon (AMZN) immediately following earnings. Another key stock to watch is Rivian Automotive (RIVN), which Amazon (AMZN) has a 17% stake in. Notably, Amazon (AMZN) currently has 15,000 electric delivery vehicles on the road with a plan to reach 100,000 vehicles by 2030. Since the last Amazon (AMZN) earnings report, Rivian (RIVN) announced a huge partnership with Volkswagen (OTCPK:VLKAF). In the tech sector, Meta Platforms (META) has moved directionally with Amazon (AMZN) following its earnings report 78% of the time over the last five years, while Netflix (NFLX) tags along 66% of the time.

ETF watch

ETFs with a heavy weighting in Amazon (AMZN) include Direxion Daily AMZN Bull 2X Shares (AMZU), Vanguard Consumer Discretionary Index Fund (VCR), the ProShares Online Retail (ONLN), First Trust Dow Jones Internet Index Fund (FDN), Consumer Discretionary Select Sector SPDR Fund (XLY), Fidelity MSCI Consumer Discretionary Index (FDIS), VanEck Retail (RTH), iShares US Consumer Discretionary (IYC), and The Nightview ETF (NITE).