Amazon Stock Is Up 50% YTD, Can It Top The Estimates In Q3?

Amazon (NASDAQ: AMZN) is scheduled to report its fiscal Q3 2023 results on Thursday, October 26, 2023. We expect Amazon
AMZN
to beat the consensus estimates of earnings and revenues. The company surpassed the street expectations in the last quarter, with net revenues increasing by 11% to $134.4 billion. It was driven by an 11% rise in North America, a 10% increase in International, and a 12% growth in Amazon web services segments. We expect the third quarter result to follow the same trend. Our interactive dashboard analysis on Amazon’s Earnings Preview has more details.

Amid the current financial backdrop, AMZN stock has faced a notable decline of 25% from levels of $165 in early January 2021 to around $125 now, vs. an increase of about 10% for the S&P 500 over this roughly 3-year period. However, the decrease in AMZN stock has been far from consistent. Returns for the stock were 2% in 2021, -50% in 2022, and 51% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 10% in 2023 – indicating that AMZN underperformed the S&P in 2021 and 2022. In fact, consistently beating the S&P 500 – in good times and bad – has been difficult over recent years for individual stocks; for other heavyweights in the Consumer Discretionary sector including TSLA, HD, and TM, and even for the megacap stars GOOG, MSFT, and AAPL. In contrast, the Trefis High Quality Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could AMZN face a similar situation as it did in 2021 and 2022 and underperform the S&P over the next 12 months – or will it see a recovery?