{"id":613213,"date":"2026-04-29T12:00:11","date_gmt":"2026-04-29T12:00:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/613213\/"},"modified":"2026-04-29T12:00:11","modified_gmt":"2026-04-29T12:00:11","slug":"amazon-q1-earnings-put-the-spotlight-on-ai-spending-and-revenue","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/613213\/","title":{"rendered":"Amazon Q1 earnings put the spotlight on AI spending and revenue"},"content":{"rendered":"\n

Amazon (AMZN<\/a>) will report its first quarter earnings alongside rivals Google (GOOG<\/a>, GOOGL<\/a>), Meta (META<\/a>), and Microsoft (MSFT<\/a>) on Wednesday, with investors looking for more signs that the company\u2019s massive artificial intelligence spending is paying off.<\/p>\n

All totaled, the AI hyperscalers are expected to spend a whopping $650 billion in capital expenditures in 2026, and Amazon will account for $200 billion of that.<\/p>\n

Despite that, Wall Street has been largely positive on Amazon, with the stock of the cloud and e-commerce giant up 13% year to date. That\u2019s better than Google\u2019s 12% increase, and well ahead of Microsoft, which is down 12%.<\/p>\n

Amazon, however, is also dealing with increased shipping costs due to rising fuel prices, which could impact e-commerce revenue in the quarter.<\/p>\n

According to Morgan Stanley\u2019s Brian Nowak, a downside scenario in fuel costs could create a $4 billion headwind for Amazon, even when accounting for fuel surcharges. His base model sees $600 million and $2 billion in costs in the first and second quarters, respectively, and assumes that Amazon will find offsets in the second half of the year.<\/p>\n

\"FILE Amazon CEO Andy Jassy speaks during an Amazon Devices launch event in New York City, U.S., Feb. 26, 2025. REUTERS\/Brendan McDermid\/File Photo \u00b7 Reuters \/ Reuters <\/p>\n

For the quarter, Amazon is expected to report earnings per share (EPS) of $1.62 on revenue of $177.2 billion, according to Bloomberg analyst consensus estimates. The company saw earnings per share of $1.59 and revenue of $155.6 billion in Q1 last year.<\/p>\n

Amazon\u2019s e-commerce segment is expected to come in at $62.65 billion, while its advertising business is projected to generate $16.89 billion, a 21% year-over-year improvement.<\/p>\n

The company\u2019s Amazon Web Services (AWS) revenue is estimated to be $36.79 billion, up 25% from the same period last year.<\/p>\n

Investors will be especially interested in Amazon\u2019s remaining performance obligations (RPOs), or contracts the company has signed with customers but hasn\u2019t yet been paid for.<\/p>\n

In Q4, Amazon said it has RPOs of $244 billion. The number provides Wall Street with a sense of how much demand Amazon is seeing for its cloud platform and how much of that it\u2019s able to serve.<\/p>\n

Earlier this month, CEO Andy Jassy wrote in his annual shareholder newsletter that AWS\u2019s AI revenue has a run rate of more than $15 billion as of Q1 2026 and continues to grow. What\u2019s more, he said the business could be growing faster, but the company is still capacity-constrained, despite adding 3.9 gigawatts in 2025 and plans to double that by 2027.<\/p>\n

Amazon\u2019s chip business is also becoming an increasingly important piece of Amazon\u2019s AWS business.<\/p>\n

According to Jassy, the company is looking into selling its processors to third parties in the future rather than renting them.<\/p>\n

As it stands, Jassy explained, Amazon\u2019s chip business now has an annual revenue run rate of $20 billion and is growing by triple digits year over year. But the CEO said that amount is understated because it only monetizes its chips through its AWS EC2 service.<\/p>\n

If it were a standalone business, he said, Amazon\u2019s chip revenue would have a run rate of roughly $50 billion.<\/p>\n

Last week, Amazon said it entered into a deal to provide Graviton CPUs to Meta to power that company\u2019s AI capabilities and services. Amazon also announced an expanded deal with Anthropic in which it will provide computing power to the AI startup via its Trainium chips.<\/p>\n

In return, Amazon will invest $5 billion in Anthropic and has the option to invest an additional $20 billion in the future.<\/p>\n

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