Shares of Amazon (AMZN +1.63%) were among the winners as strong cloud infrastructure results from Microsoft (MSFT 0.13%) and Alphabet (GOOG +1.61%) (GOOGL +1.75%) seemed to lead investors to believe that Amazon will report similar strength in its cloud unit when it reports first-quarter earnings next Tuesday.
Both of its Magnificent Seven peers also reported strong overall results, sending tech stocks up broadly today, and stoking enthusiasm for Amazon's update next week.
As a result, Amazon stock was up 3.4% at the close on Friday.
Image source: Getty Images.
A good quarter for AI and the cloud
While Amazon's cloud infrastructure business, Amazon Web Services (AWS), competes with Google Cloud and Microsoft Azure, investors seem to believe that a rising tide in cloud infrastructure spending will benefit AWS.
Microsoft reported impressive 31% revenue growth in Azure in its most recent quarter, and management noted that more than 65% of the Fortune 500 is now using its Azure OpenAI service as artificial intelligence (AI) helps drive cloud spending.
At Alphabet, meanwhile, Google revenue jumped 28% and profitability ramped up as well, which management said reflected strong demand for cloud infrastructure and its Workspace productivity tools.
NASDAQ: AMZN
Key Data Points
Does it matter for Amazon?
Investors should be wary of reading too closely into those two companies' earnings reports. AWS has been struggling for the past few quarters with revenue growth in the low teens, losing market share to both Azure and Google Cloud. But AWS did show some signs of a rebound in the fourth quarter, which could bode well for Tuesday's update.
And both Microsoft and Alphabet are seeing strong demand for AI, which should support Amazon's AI initiatives as well.
We'll get the full picture on Amazon when it reports earnings on April 30. Analysts are expecting revenue to grow 25.1% to $142.5 billion, and for earnings per share to jump $0.31 to $0.83. Those expectations could set the stock up for a big swing on Wednesday, depending on the results.
