Amazon will report first-quarter earnings after the close on Thursday with Wall Street consensus calling for revenue of $164.8 billion, up 11.2% year-over-year, and earnings per share of $1.42. The most-watched line item remains Amazon Web Services revenue, which analysts expect grew 26% to $32.4 billion, the fastest growth rate the cloud unit has posted since the second quarter of 2022.
The acceleration reflects three converging tailwinds: enterprise AI workloads scaling on Trainium and Inferentia chips, recovery in legacy enterprise IT spending after two years of cost optimization, and the impact of Anthropic's Claude family workloads driving incremental compute demand. AWS now represents 17% of Amazon's revenue but more than 65% of operating income.
Project Kuiper Reaches Critical Mass
Project Kuiper, Amazon's satellite broadband network, completed its 850th satellite launch this month and is on track to begin commercial service in eight U.S. metros and three European markets by Q3. The buildout has cost an estimated $24 billion to date and is expected to require an additional $15 billion before reaching cash-flow breakeven in 2028.
CFO Brian Olsavsky has previously framed Kuiper as a long-duration infrastructure investment, but Wall Street is increasingly modeling the segment as a credible challenger to SpaceX's Starlink for both consumer broadband and enterprise connectivity. T-Mobile signed a wholesale agreement last month worth a reported $4 billion over seven years.
Retail and Advertising
Outside of cloud and satellites, the retail business continues to deliver steady operating leverage as Amazon completes the regionalization of its U.S. fulfillment network. North America retail margins are expected to reach 6.8%, up from 5.4% a year ago, while International retail is finally projected to post a positive operating margin for the first time in five quarters.
Advertising remains the dark horse of the story, with consensus calling for $14.6 billion in Q1 revenue, growth of 18% year-over-year, and operating margins north of 35%. Amazon has overtaken Meta and Google to become the third-largest digital advertising business globally, behind only the two leaders, after launching its full sponsored video ad inventory across Prime Video earlier this year.