Why Traders Should Expect 'Very Strong' Numbers From Amazon

Amazon.com, Inc. AMZN is scheduled to report its second quarter earnings after the closing bell on Thursday. James Lee, CLSA analyst, was on CNBC to discuss what investors should expect and watch out for in Amazon's results.

Expect The Numbers To Be Very Strong

"The company reported a separate profitability line for AWS last quarter," Lee began. "It's already very impressive as 17 percent operating margin contributing to more than 50 percent of Amazon's consolidated operating income. So we expect this quarter continue to be strong. We expect AWS to grow at 50 percent year-over-year at a operating margin of 17.5 percent."

"And this quarter very interesting...the comp is easier. Amazon did a big price cut at AWS last year in 2Q and so therefore we expect the numbers to be very strong this quarter."

Prime Day

On how the Prime Day turned out to be for Amazon, Lee said, "From our checks specifically from ChannelAdvisors showing that same-store sales for July 15 this year is 93 percent higher than last year and Amazon also said Prime Day the GMV that they already surpassed the Black Friday that they did last year. So seem like from the traction perspective, the Prime Day was very successful."

Continue To Be Very Constructive

Lee was asked his outlook for the stock going into its earnings. He replied, "We do have a Outperform rating at a price target of $500. So we continue to be very constructive into the quarter."