Amazon stock set to impress as analysts cheer cloud, AI, ad growth before Q2

When Amazon.com reports its second-quarter earnings on Thursday, analysts expect the tech giant to continue its robust performance, according to Barron’s. Focus will be on the growth powered by the Amazon Web Services (AWS) cloud and the potential effects of tariffs on its retail operations.

Despite the looming tariff effects concerning the company's extensive global supply chain, optimism remains strong, especially with AWS seen as a key value driver. According to Barron’s, AWS's growth trajectory is bolstered by Amazon's partnership with Anthropic, an AI startup utilizing Amazon's infrastructure.

Tariffs remain a point of uncertainty. The company previously indicated plans to itemize tariff impacts in its pricing strategy, though this hasn’t materialized. As CEO Andy Jassy noted in Q1 by Barron’s, achieving a broad selection at competitive prices is paramount. The long-term implications of tariffs remain unclear, yet the importance of keeping costs low is indisputable, according to Barron's.

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Amazon's investment in AI is increasingly pivotal. Its role in the AI sector extends beyond consumer retail, with substantial investments through AWS, according to Seeking Alpha. The cloud computing service is predicted to generate significant contributions in the upcoming quarters, underscoring the importance of AI and machine learning tools.

Business Insider reports that AWS's growth, previously hindered by chip shortages and data center constraints, is expected to recover, aiming at a 17% increase in net sales excluding foreign exchange impacts.

In contrast, Celestica, a strategic AI infrastructure partner, has reported its strongest quarter in two years, emphasizing the interconnected nature of the AI and tech ecosystem. Both Amazon and Celestica receive strong ratings, highlighting the optimism within the sector despite tariff challenges.