Alphabet & Amazon Earnings Previews: Fiscal Q4 2024

Alphabet (NASDAQ: GOOGL) Q4 Earnings Preview:

Alphabet – Consensus Expectations for Q4 2024, Past Earnings Surprises, Consensus Revisions, and CAGR

Source: Visible Alpha consensus (January 30, 2025). “Previous Surprises” indicate the direction that specific line items beat or missed. “Consensus Revisions” show the trajectory of line items from a given date.

Alphabet Q4 2024 Earnings Preview

According to Visible Alpha consensus, total revenues expected for Q4 2024 have remained around $96 billion since the July quarter, driven by resilience in its search business. In addition, the Q4 consensus expectations for operating income and EPS around $30 billion and $2.12/share have not changed much since last quarter. Questions have been emerging about the impact of AI on its core business but have not impacted consensus revenue estimates for Q4 or 2025. However, consensus EPS of $2.12/share ranges from $2.44 to $1.84 for Q4, driven by differing assumptions around costs. It will be interesting to hear what Alphabet says about the outlook.

We are closely monitoring the trend of the Cloud business and note the improved sentiment for the Cloud business. The expected operating profit margin has increased significantly from 7.6% last January to now 16.2% for Q4. However, the 27 estimates range from 10% to 19%, signaling continued divergent views about the performance of this business.

For 2025, analysts are also split in their views. For the Cloud business, Visible Alpha consensus expects the operating profit margin to hit 17.5% next year but ranges from 9.3% to 18.5%. Longer-term, the consensus Cloud margin is estimated to generate a 20% margin by the end of FY 2026, ranging from 12% to 26.6%. What will be the right margin level for Alphabet’s Cloud business?

Alphabet stock has traded up 15% since last quarter’s release and up 42% since January 2024, outperforming the S&P 500. The consensus P/E for FY 2025 is 22x and 19x for FY 2026. Questions remain about the profitability of the Cloud business and its Unallocated and Other Bets. Could the Q4 release provide more visibility into the trajectory of 2025 profitability and give shares a boost?

Alphabet Consensus Estimate Revisions

Source: Visible Alpha consensus (January 30, 2025). Stock price data courtesy of S&P Global. Alphabet’s stock price is as of the market close on January 29, 2025.

Amazon.com (NASDAQ: AMZN) Q4 2023 Earnings Preview:

Amazon – Consensus Expectations for Q4, Past Earnings Surprises, Revisions, and CAGR

Source: Visible Alpha consensus (January 30, 2025). “Previous Surprises” indicate the direction that specific line items beat or missed. “Consensus Revisions” show the trajectory of line items from a given date.

Amazon Q4 2024 Earnings Preview

According to Visible Alpha consensus, total revenues expected for Q4 have come up slightly from August, from $186.1 billion to $187.4 billion, driven by expected strength in Amazon’s online retail business this holiday season. Consensus estimates for AWS have remained around $29 billion on projected stable growth in this segment. The focus will likely be on the Q4 performance and the 2025 outlook for the North American and AWS margins and their impact on EPS. The critical Q4 holiday selling period will be an important read into the consumer that may set the tone for FY 2025.

The North American operating margin has increased significantly from a meager 1.1% at the beginning of last year to an estimated 6.7% for Q4 2024. For Q4, the estimated margin ranges from 4.0% to 7.8%, with consensus at 5.7%. The estimated Q4 margin is expected to be 5.9% and 7.3%. What will the company say about the outlook for the North American online retail business?

AWS margin came in at 38.1% last quarter, and is expected to decline quarter-over-quarter to 35.3%. For Q4, expectations have steadily increased 650 bps since last January and there is concern that margins may be topping out. There is, however, a significant range of estimates for the Q4 AWS margin into next week’s release, with analysts expecting from 30% to 39%. The debate around AI is fueling the different assumptions.

The stock has traded up 27% since late quarter and up 58.1% from January 2024, outperforming the S&P 500.  The consensus P/E for FY 2025 is 37.7x and 30.7x for FY 2026. Could the Q4 release provide the next positive catalyst for the stock?

Amazon Consensus Estimate Revisions

Source: Visible Alpha consensus (January 30, 2025). Stock price data courtesy of S&P Global. Amazon’s stock price is as of the market close on January 29, 2025.