Amazon (NASDAQ:AMZN) is gearing up to announce its fourth-quarter 2023 results on February 1.

Anticipating a strong performance, the company projects net sales to range between $160 billion and $167 billion for the quarter, reflecting a 7-12% year-over-year growth.

The Consensus Estimate places net sales at $166.26 billion, indicating an 11.4% increase compared to the previous year’s reported figure.

Projected at 81 cents per share, the Consensus Estimate for fourth-quarter earnings signals a significant surge from the 21 cents reported in the corresponding quarter of the previous year. This figure has increased by 2.5% in the past seven days.

Amazon has consistently outperformed the Consensus Estimate in the last four quarters, with an average surprise of 54.9%.

Holiday, Prime, Retail & Streaming Boosts Expected

The company’s robust holiday performance, fueled by strong initiatives, is likely to have contributed substantially to top-line growth, with record-breaking sales during Black Friday and Cyber Monday.

The expansion of Amazon’s distribution network, Prime-enabled fast delivery services, and robust grocery services are expected to bolster the online retail business in Q4.

The Consensus Estimate for online store sales is $68.53 billion, indicating a 6.2% growth from the previous year.

Amazon’s aggressive approach to enhancing its physical presence is anticipated to have positively impacted performance, especially with growing momentum across Amazon Fresh grocery stores, Whole Foods stores, and Amazon Go outlets in the United States.

The consensus mark for physical store sales in Q4 is $5.31 billion, reflecting a 7% growth from the figure reported in the year-ago quarter.

Strengthening relationships with third-party sellers are also expected to be a positive factor, with the consensus mark for sales generated by third-party sellers at $41.5 billion, up 14.1% from the prior-year quarter.

In the streaming services segment, the company is likely to benefit from the strong momentum across Prime Video, driven by expanding original content and overall content portfolios.

Gains from the growing momentum across Amazon Music are also expected to be reflected in the Q4 results.

The Consensus Estimate for subscription service sales is $10.4 billion, suggesting a growth of 13.2% from the previous year.

Consideration of AWS Portfolio Strength

The expansion of Amazon Web Services (AWS) is expected to contribute positively to Q4 performance. AWS introduced innovative services, including a palm-based identity and a fully managed service called Amazon One Enterprise.

Additionally, the introduction of new capabilities for AWS Supply Chain and the announcement of next-generation chip families, AWS Graviton4 and AWS Trainium2, are expected to be beneficial.

AWS’s fourth-quarter revenues are estimated to reach $24.32 billion, up 13.8% from the year-ago reported figure.

Smart Device Portfolio Contribution

Amazon’s robust Fire products family, Echo smart speakers, Blink doorbells, and eero products are likely to have continued benefiting its financial performance in Q4. The enhancement of Alexa features is expected to enhance the user experience, translating into positive results.

However, concerns such as inflationary pressure, geopolitical tensions, and foreign currency headwinds may have persisted.

Featured Image: Unsplash @ Christian Wiediger

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