Yahoo Finance Amazon earnings, Q4 GDP: What to know in markets Thursday
E-commerce giant Amazon’s (AMZN) earnings and U.S. Q4 GDP take centerstage on a busy Thursday.
After the market close, Amazon is expected to report adjusted earnings of $7.02 per share and revenue growth of 19% to $86.15 billion during its fourth quarter. The record holiday sales are expected to boost sales but could be overshadowed by the heavy spending planned for this year. Advertising revenue likely grew at a rapid clip.
Analysts also project that Amazon’s one-day shipping weighed on margins; however, the bigger concern on Wall Street involves Amazon Web Services (AWS). AWS has been a strong revenue driver for Amazon, but with competition from Microsoft’s Azure and Google Cloud, margin compression is expected.
Shares of Amazon are up 16% over the past 12 months and have underperformed the broader market’s 26% gain in the same time period. The options market is implying a 4.3% move in either direction following the announcement.
Fourth-quarter GDP
Meanwhile, investors will get the first look at the U.S. fourth-quarter gross domestic product (GDP) Thursday. Economists surveyed by Bloomberg expect the U.S. economy to have grown 2.2% during the quarter, up from 2.1% growth in the third quarter.
“A slowdown in consumption and government spending should be offset by a small pickup in business and residential investment. Trade and inventories will continue to be volatile with a large contribution from net exports partially offset by a drag from inventories,” Credit Suisse economists explained in a note Jan. 23. “Consumer spending should slow to a moderate pace of 1.9% after growing solidly by 3.1% in Q3. Labor income has slowed amid sideways consumer sentiment, suggesting a trend slowdown in consumption is likely.”
Looking forward to the first quarter, Credit Suisse expects even slower growth. “We expect headline GDP growth to slow to 1.6% QoQ annualized in Q1, continuing the moderation seen in recent quarters with some added weakness from the Boeing production shutdown. We forecast Q4/Q4 real GDP growth of 1.9% in 2020, a step back from an estimated growth of 2.3% in 2019.”
Other notable earnings announcements scheduled for Thursday include Biogen (BIIB), Coca-Cola (KO), Eli Lilly (LLY), Hersey (HSY), Raytheon (RTN), UPS (UPS), Valero (VLO), Verizon (VZ) before market open; Amazon (AMZN), Electronic Arts (EA), Western Digital (WDC), Visa (V), Vertex (VRTX), U.S. Steel (X) after market close.
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Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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