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Analysts are watching margins, cloud

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Amazon (AMZN) is set to report its Q4 2022 earnings on Feb. 2, as the company looks to deliver after a difficult year that rattled its stock.

Here’s what Wall Street’s expecting to see from Amazon’s key numbers, as compiled by Bloomberg.

Net Sales – $145.8 billion expected

Online Stores Net Sales: $65.03 billion

Physical Stores Net Sales: $4.93 billion

Earnings Per Share (EPS): 17 cents expected

Amazon Web Services (AWS) Net Sales: $21.76 billion expected

Operating Income: $2.51 billion expected

Amazon’s shares declined about 47% over the course of 2022, as the company found itself in the throes of a digital advertising slowdown, high inflation, and rising interest rates. After the company grew rapidly to keep up with pandemic demand, the far-reaching economic uncertainty of the last year left Amazon in a bind. To that end, Amazon announced some of Big Tech’s most notable layoffs, looking to shed 18,000 of its employees. It’s the largest layoff in the company’s history to date.

This round of earnings will also tie up the year in which a unionization push at Amazon fully materialized. In April, the Amazon Labor Union (ALU) won a union election at a warehouse in Staten Island, N.Y. The company’s been fighting it since, but that hasn’t stopped the labor movement from gaining momentum. This month, workers at a U.K. Amazon warehouse staged the first strike of its kind in that country.

What experts are looking for

Wall Street will especially be keeping an eye on Amazon’s cloud results this week. Amazon Web Services (AWS) is a stalwart of the Seattle-based company’s business, a cloud giant that’s long been a reliable source of revenue and growth for the company. However, Microsoft’s (MSFT) gloomy earnings call last week – in which the company predicted cloud growth would decelerate – indicates that cloud growth at Amazon could also viably be slowing down.

Analysts are also hoping to see some retail growth that demonstrates the resilience of Amazon’s e-commerce business. Raymond James analyst Aaron Kessler pointed out in a Jan. 24 note that data from “MasterCard Spending Pulse data indicates U.S. e-commerce sales increased 11.3% year-over-year in 4Q,” so we could see some muted or even modest retail growth out of Amazon. The margins also matter, he added.

“Given slowing top line growth for retail, we expect investors to be highly focused on retail margins,” Kessler wrote.

As the company’s headcount is being slashed, Kessler also expects to see the company’s could save Amazon on its operating expenses – though we may not start to see the effects of those job cuts just yet.

“We believe these reductions could result in $4B plus of reduced annualized operating expenses for Amazon,” he wrote. “We expect lower operating expenses to show up more beginning in 2Q23 results given severance costs.”

Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and on LinkedIn.

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