Amazon's Quarterly Results Today: All Eyes on AWS Cloud Performance
Amazon is set to announce its quarterly financial results today, with Wall Street and investors directing intense scrutiny toward the performance of its cloud computing division, Amazon Web Services (AWS). This heightened focus comes directly in the wake of Microsoft's recent earnings report, which revealed unexpected slowing growth in its competing Azure cloud platform.
Microsoft's Cloud Slowdown Casts a Shadow
Last week, software giant Microsoft saw its stock plunge partly due to decelerating growth at Azure, its key cloud-computing business. The critical growth metric for Azure and other cloud services registered at 39%, falling short of the 39.4% consensus estimate from StreetAccount. Microsoft's Chief Financial Officer, Amy Hood, provided context, suggesting the result could have been higher if the company had prioritized customer allocation of data center infrastructure over its own internal needs. "If I had taken the GPUs that just came online in Q1 and Q2 in terms of GPUs and allocated them all to Azure, the KPI would have been over 40," Hood explained.
Amazon's Stock Performance and Investor Sentiment
Amazon shareholders are actively seeking positive catalysts for a stock that has been underperforming relative to its mega-cap tech peers. In 2025, Amazon was the worst performer among the so-called "Magnificent Seven" tech giants, posting a modest gain of just 5.2%. The stock has started 2026 with less than a 1% increase. This contrasts sharply with broader market indices; the Nasdaq 100 Index surged 20% in 2025, while the S&P 500 Index gained 16%. A silver lining for Amazon is that its stock has slightly outperformed both these benchmarks so far in the current year.
The Critical Importance of AWS Revenue
According to a Bloomberg report, Wall Street analysts anticipate Amazon will report a 21% year-over-year increase in AWS revenue for the fourth quarter, reaching approximately $34.8 billion. For the entire company, projections suggest a 13% jump in fourth-quarter revenue to $211.5 billion, with adjusted earnings per share expected to rise 8% to $2.40. While Amazon's diverse revenue streams from e-commerce, advertising, and other segments could potentially offset any disappointment from AWS, the cloud business remains the primary focal point for investor analysis and market reaction.
Investor Concerns About Broader Cloud Sector Trends
David Miller, Chief Investment Officer at Catalyst Funds, which holds Amazon shares across several portfolios, highlighted the uncertainty in a conversation with Bloomberg. "It isn't clear how much of Microsoft's disappointment might be due to company-specific issues and how much might reflect an overall slowing in the cloud space," Miller stated. He added a crucial warning: "If it's the latter, that could carry over." This sentiment underscores the market's anxiety about whether Microsoft's slowdown is an isolated event or indicative of a broader industry trend that could also impact Amazon's AWS.
Questions on AI Investments and Growth Expectations
Microsoft's aggressive capital expenditures related to artificial intelligence, coupled with the slowing Azure growth, have prompted investors and analysts to question when these substantial investments will yield more significant returns. Melissa Otto, Head of Technology, Media, and Telecommunications Research at Visible Alpha, commented on the pricing of growth expectations into stock valuations. "It's really about what's already priced into the stock, and I think what was starting to price in for [Microsoft] was a higher growth rate, which is always a little dangerous," Otto noted. She also observed, "We haven't really seen Amazon moving up in the same way," suggesting Amazon's stock has not yet baked in similarly elevated growth assumptions, potentially leaving room for a positive surprise or less downside risk if AWS meets expectations.
The technology sector awaits Amazon's report with bated breath, as the results will not only reflect the company's health but also provide critical insights into the momentum of the global cloud computing industry and the return on massive AI investments.
