After strong results from (NASDAQ:) and (NASDAQ:) yesterday, both stocks jumped in after-hours trading. Now, investors are looking ahead to Amazon.com (NASDAQ:) and Apple (NASDAQ:) earnings, which are due after the closing bell.
Amazon shares were already rising last night. The stock gained nearly 3% in pre-market trading, recovering from a small drop earlier in the day. The move came after Microsoft’s earnings, which boosted confidence in Amazon’s cloud business, too.
Cloud was the most significant growth driver for Microsoft in Q2, and investors are hoping Amazon shows a similar trend. Cloud remains a key profit source for both companies.
Analysts expect Amazon to report Q2 sales of $162.1 billion, up 9.5% from last year. Earnings per share are forecast at $1.32, slightly above the $1.26 reported a year ago.
Source: InvestingPro
It is also worth pointing out that Amazon often beats analyst estimates. The company has topped earnings expectations for nine straight quarters and has exceeded revenue forecasts in eight of the last nine.
Source: InvestingPro
To get a clearer view of how Amazon’s Q2 results might affect its stock, it helps to look at its valuation.
Analysts currently have an average price target of $252.03 for Amazon, which is under 10% higher than its current price. InvestingPro’s Fair Value estimate, based on several standard valuation models, puts the stock at $246.28—about 7% above where it closed last night.
Source: InvestingPro
Based on analyst targets and valuation models, Amazon’s room to rise appears limited. The expected boost in the share price ahead of Thursday’s session may already be pricing in some optimism.
This means tonight’s results would need to strongly beat expectations—possibly by a wide margin—to trigger a meaningful rally.
That doesn’t make Amazon a poor investment, but it does suggest there may be more attractive opportunities elsewhere this earnings season.
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Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk is at the investor’s own risk. We also do not provide any investment advisory services.