Alphabet (GOOGL), Google's parent firm, is set to release its first quarter 2025 earnings after trading hours on Thursday, April 24, followed by a conference call at 4:30 PM ET. Market projections suggest Alphabet will post an earnings per share (EPS) of $2.01 and a revenue of $89.15 billion for the quarter ending in March. Notably, this EPS estimate has been slightly trimmed by $0.02 in the past three months.
Amid these earnings expectations, analysts have been revising Alphabet's price targets downward. Guggenheim lowered its target from $215 to $190, while Jefferies adjusted its target from $235 to $200, both maintaining a Buy rating. Piper Sandler and Citi followed suit, reducing their targets to $185 and $195 respectively, citing uncertainties in the advertising landscape and macroeconomic pressures.
In legal news, a federal court recently ruled that Google violated antitrust laws by monopolizing specific digital advertising markets. The court plans to determine suitable remedies soon. Some analysts believe the ruling could eventually lead to the divestiture of certain Google ad segments, though the financial impact on Alphabet is expected to be modest.
In mergers and acquisitions, Alphabet announced a $32 billion all-cash deal to acquire cloud security platform Wiz. This acquisition aims to enhance Google Cloud’s security capabilities and multi-cloud operations. Analysts are projecting long-term benefits from this acquisition, despite potential short-term market pressures on other cloud service providers.
Separately, Google has decided to maintain its current approach to offering third-party cookie choices in its Chrome browser, emphasizing the importance of online privacy and user control. This decision is part of Google's ongoing Privacy Sandbox initiative, which aims to strengthen online privacy while supporting a sustainable ad-driven internet environment.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 67 analysts, the average target price for Amazon.com Inc (AMZN, Financial) is $248.17 with a high estimate of $295.46 and a low estimate of $195.00. The average target implies an upside of 34.60% from the current price of $184.37. More detailed estimate data can be found on the Amazon.com Inc (AMZN) Forecast page.
Based on the consensus recommendation from 73 brokerage firms, Amazon.com Inc's (AMZN, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Amazon.com Inc (AMZN, Financial) in one year is $183.63, suggesting a downside of 0.4% from the current price of $184.3699. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Amazon.com Inc (AMZN) Summary page.
AMZN Key Business Developments
Release Date: February 06, 2025
- Revenue: $187.8 billion, up 10% year-over-year.
- Operating Income: $21.2 billion, up 61% year-over-year.
- Free Cash Flow: $36.2 billion, up $700 million year-over-year.
- North America Revenue Growth: 10% year-over-year.
- International Revenue Growth: 9% year-over-year, excluding foreign exchange impact.
- Advertising Revenue: $17.3 billion, up 18% year-over-year.
- AWS Revenue: $28.8 billion, up 19% year-over-year.
- North America Operating Margin: 8%, up 190 basis points year-over-year.
- International Operating Margin: 3%, up 400 basis points year-over-year.
- AWS Operating Income: $10.6 billion, up $3.5 billion year-over-year.
- Capital Investments: $26.3 billion in the fourth quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Amazon.com Inc (AMZN, Financial) reported a 10% year-over-year increase in revenue, reaching $187.8 billion, despite foreign exchange headwinds.
- Operating income rose by 61% year-over-year to $21.2 billion, marking the largest operating income quarter ever for the company.
- Amazon's advertising revenue grew 18% year-over-year, reaching $17.3 billion, indicating strong growth in this segment.
- AWS achieved a 19% year-over-year growth, with an annualized revenue run rate of $115 billion, showcasing its continued expansion.
- The company has successfully reduced its global cost to serve on a per unit basis for the second consecutive year, while increasing delivery speed and improving safety.
Negative Points
- Foreign exchange rates posed a $900 million headwind in the quarter, impacting revenue growth.
- AWS growth is currently moderated by supply chain constraints, including chip shortages and power limitations.
- The company anticipates a decrease in full-year 2025 operating income by approximately $400 million due to changes in the useful life of certain assets.
- Amazon is facing increased competition in the AI space, with the need to invest heavily in AI infrastructure impacting short-term margins.
- The company is experiencing fluctuations in AWS operating margins, which have varied significantly over the past two years.
