For Amazon, Expect 'Very Very Modest' Earnings Growth On 'Very Solid' Revenue Growth
Pachter began the conversation by attempting to break down Amazon's growth. He suggested the retail business is growing in the high-teens, and if the company falls short of this level growth, then investors "will have a problem" with the results. The analyst is expecting AWS to grow by around 50 percent in the quarter and this level of growth is sustainable for at least the remainder of the year, if not the next few years.
"Beyond that, I don't think investors are going to care very much so long as Amazon makes a profit," Pachter continued.
Pachter further suggested that sell-side analysts are "out of touch" with what Amazon's CEO Jeff Bezos is thinking. He explained that the sell is calling for Amazon's earnings to rise almost four-fold this year from $1.25 per share to $4.79 per share.
Pachter believes Amazon's earnings per share for the year will be closer to $3.00, if not below the $3.00 mark. He added that Amazon will "never run out of money," and it can sustain heavy marketing campaigns to push or enter new markets, such as Echo, online grocery delivery and food ordering services.
"That stuff costs money— and it costs a lot of money," he summed up his expectations for Thursday's quarterly print. "I think Amazon will deliver very very modest earnings growth on very solid revenue growth."
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