Should You Buy, Sell or Hold Amazon Stock Before Q1 Earnings?

Amazon AMZN is scheduled to report first-quarter 2025 results on May 1.

For the first quarter, net sales are expected between $151 billion and $155.5 billion. Net sales are expected to grow 5-9% from the year-ago quarter’s reported figure. Management projects an unfavorable foreign exchange impact of 150 basis points.

The Zacks Consensus Estimate for net sales is pegged at $154.56 billion, indicating growth of 7.85% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.35 per share, which indicates growth of 19.47% from the year-ago quarter.

See the Zacks Earnings Calendar to stay ahead of market-making news.

The company has been benefiting from its dominant position in the e-commerce and cloud markets. It is also riding on strengthening generative AI capabilities.

AMZN’s Earnings Surprise History

Amazon has an impressive earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 22.37%. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 25.27%.

Amazon.com, Inc. Price and EPS Surprise

Amazon.com, Inc. price-eps-surprise | Amazon.com, Inc. Quote

Earnings Whispers for AMZN

Our proven model does not predict an earnings beat for Amazon this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

AMZN has an Earnings ESP of -2.57% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Shaping Upcoming Results of AMZN

As Amazon prepares to report its first-quarter 2025 earnings, investors face a mixed outlook that warrants a cautious approach. Despite the company's continued strength across multiple segments, several factors suggest holding the stock or waiting for a better entry point.

Amazon management has flagged two significant headwinds for first-quarter 2025: unfavorable foreign exchange impacts and the absence of leap year benefits. The company specifically noted that first-quarter 2024 benefited from approximately $1.5 billion in additional net sales from the extra leap year day, creating a challenging year-over-year comparison. Additionally, management anticipates an unusually large foreign exchange headwind of approximately $2.1 billion (150 basis points) in the first quarter.

AWS and AI Initiatives

The crown jewel of Amazon's portfolio continues to shine, with the Zacks Consensus Estimate projecting AWS sales of $29.31 billion, representing 17.1% year-over-year growth. The quarter saw Amazon Ads bringing generative AI capabilities to Amazon Marketing Cloud with a new SQL Generator, enabling advertisers to develop insights faster using natural language. Additionally, AWS secured a significant win with the launch of Wim, a cloud-native mobile network operator in Mexico built entirely on AWS infrastructure, demonstrating the platform's versatility beyond traditional enterprise applications. 

We note that the strengthening customer base is likely to have driven AWS' top-line growth in the first quarter. It is also expected to have aided Amazon in sustaining its cloud dominance against its strong contenders like Microsoft MSFT, Alphabet GOOGL and Oracle ORCL.

Entertainment Expansion

The streaming segment continues to gain momentum through expanded offerings. Prime Video launched its inaugural NASCAR season coverage in February with practice and qualifying rounds, while premium network MGM+ released a trailer for the upcoming mystery series Nine Bodies in a Mexican Morgue produced by Sony Pictures Television. These content initiatives should support the consensus estimate for subscription service sales of $11.5 billion, indicating 6.8% growth compared to the previous year.

E-commerce and Physical Retail

Amazon's physical retail operations are expected to show healthy growth, with consensus estimates projecting physical store sales of $5.42 billion, indicating a 4.2% year-over-year increase. The integration of technologies like Amazon Dash Cart into brick-and-mortar locations strengthens the company's omnichannel presence.

Third-party seller services remain a significant growth driver with consensus estimates pegged at $36.61 billion, indicating a 5.8% year-over-year increase. This reflects Amazon's continued success in monetizing its marketplace platform and fulfillment services.

AMZN Price Performance & Stock Valuation

Shares of Amazon have lost 13.9% in the year-to-date period compared with the broader Zacks  Retail-Wholesale sector and the S&P 500 index's decline of 3.7% and 6.4%, respectively.

AMZN’s Year-to-date Performance

Now, let’s look at the value Amazon offers investors at current levels. AMZN is trading at a premium with a forward 12-month P/S of 2.81X compared with the Zacks Internet - Commerce industry’s 2.09X, reflecting a stretched valuation.

AMZN’s P/S F12M Ratio Depicts Stretched Valuation

Investment Thesis

Amazon presents a mixed investment case ahead of first-quarter 2025 earnings, warranting a Hold recommendation. The company continues to demonstrate strength across multiple segments, with AWS projected to grow 17.1% year over year to $29.31 billion and strategic initiatives, including AI integration, NASCAR streaming rights, and entertainment content expansion. While Amazon's long-term growth trajectory remains intact, near-term challenges merit investor caution. The company's first-quarter guidance projects operating income between $14.0 billion and $18.0 billion compared with $15.3 billion in first-quarter 2024, suggesting potential pressure on margins. Coupled with foreign exchange headwinds and tough year-over-year comparisons, the upcoming quarter may not deliver the growth acceleration some investors anticipate. Existing shareholders should maintain positions, while prospective investors might find more attractive entry points post-earnings.

Conclusion

Amazon continues to innovate across multiple fronts — from AI-powered advertising tools to streaming content expansion and cloud infrastructure growth — investors should approach the upcoming first-quarter 2025 earnings with measured expectations. The anticipated foreign exchange headwinds of $2.1 billion, the absence of leap year benefits, and projected operating income potentially below year-ago levels suggest a challenging quarter ahead. Although AWS remains a powerful growth driver with projected 17.1% year-over-year expansion, and third-party seller services continue their upward trajectory, these temporary headwinds warrant a Hold recommendation for existing shareholders and suggest potential investors await post-earnings clarity before establishing new positions.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research