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The December quarter earnings season for the “Magnificent 7” has been tepid at best until now. Tesla (TSLA) closed in the red following its Q4 report, while Apple (AAPL) was flat following the confessional. Microsoft (MSFT), meanwhile, saw a nearly double-digit dip and had its worst year since 2020. Meta Platforms (META), however, stood out and soared after better-than-expected Q4 earnings and upbeat Q1 guidance.
All eyes are now on the remaining constituents, with Alphabet (GOOG) (GOOGL) set to report after the bell today, Feb. 4, followed by Amazon’s (AMZN) earnings tomorrow. The e-commerce giant, which was the worst-performing of the lot last year, is up barely 1% for the year. While the returns are not boast-worthy, they are good enough to make AMZN the third-best Mag 7 this year, trailing only Alphabet, which has resumed its rally from last year, and Meta, which soared after its Q4 earnings. Let's look at Amazon’s Q4 earnings estimates and analyze whether the stock is a buy or a sell ahead of the report.
Amazon’s Q4 2025 Earnings Preview
Analysts expect Amazon to post revenues of $211.2 billion in Q4, a year-over-year (YoY) rise of 12.5%, and towards the upper end of the company’s guidance of $206 billion-$213 billion. The company is expected to post an earnings per share (EPS) of $1.98, which is just about 6.5% higher than the corresponding quarter last year. After two years of bottom-line growth outstripping revenue growth by a wide margin, tech companies are now staring at the opposite, as massive artificial intelligence (AI) capex is taking a toll on their profitability.
What to Watch in Amazon’s Q4 Earnings
Apart from the headline numbers and Q1 guidance, I would watch out for the following during Amazon’s Q4 earnings call:
- AI Capex: Markets haven’t been kind to companies that are increasing their AI capex without showing commensurate growth in earnings. During Amazon’s Q4 earnings call, I would watch out for the 2026 capex number, as a bigger-than-expected bump could dampen sentiments.
- AI Chip: One of the reasons Alphabet's stock has rallied in recent months is the optimism over third-party adoption of its Tensor Processing Units (TPUs). During the Q4 earnings call, Amazon might comment on the commercialization strategy for its Trainium chips and provide more updates on the Trainium 3 chips that it unveiled in December.
- AWS Growth: Amazon’s enterprise-focused Amazon Web Services (AWS) accounts for the bulk of the company’s profitability, and the stock tends to react sharply to news flow around that business. For instance, AMZN stock crashed after the Q2 2025 earnings report on fears of it losing market share to Microsoft and Alphabet but soared after the Q3 earnings as AWS growth came in better than expected. During the Q4 earnings call, I would watch out for any color on AWS’s Q1 guidance as well as the backlog number.
AMZN Stock Forecast
Sell-side analysts are quite upbeat on Amazon heading into earnings, and Citizens raised its target price by $15 to $315 amid reports that Anthropic—which has AWS as its primary cloud provider and uses Amazon's Trainium chips—has raised its internal revenue forecasts for 2026 and 2027. Jefferies analyst Brent Thill believes Amazon is “too cheap” and markets are not appreciating the acceleration in AWS growth. Overall, AMZN has a consensus rating of “Strong Buy” from the 57 analysts polled by Barchart, while its mean target price of $297.67 is almost 25% higher than its current price levels.
Should You Buy Amazon Stock Ahead of Q4 Earnings?
Amazon has several growth drivers up its sleeve. In the e-commerce segment, the business-to-business (B2B) platform Amazon Business and low-cost platform Haul still have a lot of untapped potential. Grocery is another area where Amazon has just about scratched the surface and is refining its strategy to capture a higher market share. AWS growth should also stay buoyant thanks to the reacceleration amid the AI pivot. While AI agents eating into Amazon’s lucrative digital advertisement business is a challenge, I believe the risk is a bit overblown.
As for Q4 earnings, I believe markets are quite cautious on Amazon heading into the confessional, which sets the stage for a post-earnings rise. Management’s comments on AI growth and cost-cutting initiatives could help Amazon rally, as these are still underappreciated by the markets. Overall, I find AMZN stock an attractive buy at a forward price-to-earnings multiple of just 30.6x, and I'm putting my two cents on the stock going up following the earnings release, as it did after the Q3 report.
On the date of publication, Mohit Oberoi had a position in: AMZN , GOOG , META , TSLA , MSFT . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
