What to watch
Amazon reports Q4 earnings after market close today, with consensus expecting $211.3B revenue (up 12.7% YoY) and AWS at $34.9B (21% growth). The company will discuss results on a 5pm ET call.
Three things matter for enterprise tech leaders:
AWS acceleration vs capex reality. The cloud unit hit $33B last quarter with 20% growth and a $200B backlog, driven by AI workload demand. Wall Street expects that to tick up to 21-22% in Q4. The trade-off: Amazon's on track for $125B in total capex this year, with that number likely climbing in 2026. Jassy has been clear the company is building for AI demand, but investors want proof the margins justify the spend - especially after Alphabet doubled its own capex plans this week and tanked AMD's stock 17% in the process.
Job cuts as efficiency signal. Amazon eliminated roughly 14,000 corporate roles in October (costing $1.8B in severance, which hit Q3 operating income) and another 16,000 last week. Jassy frames this as bureaucracy reduction to "operate like the world's largest startup." History suggests these cuts fund the AI buildout. Q3 showed the pressure: revenue up 13% but operating income flat after charges.
OpenAI ties tightening. The ChatGPT maker committed to $38B in AWS services over seven years last November. Now Jassy and Sam Altman are discussing a potential $50B Amazon investment in OpenAI, plus using OpenAI models to power Alexa. This matters because it shows Amazon hedging its Anthropic bet (Project Rainier, the $11B Indiana data center, runs Claude exclusively).
APAC angle
AWS competes directly with Alibaba Cloud in the region. International sales hit an estimated $49.7B last quarter. Regional logistics improvements are cutting delivery times, which helps retail but also positions AWS edge computing.
The skeptical view
Deutsche Bank notes Amazon "remains positioned as one of the worst performers among the Mag 7 given fears around the company being an AI laggard." The stock lagged peers over 12 months despite technical bullish signals. One Q4 beat won't change that perception. The company needs to show AI revenue, not just AI spending.
Worth noting: German regulators just fined Amazon $70M for price-capping practices. Small business complaints about unauthorized sales persist. China is pressuring e-commerce tax compliance. The regulatory environment isn't getting easier.
If Amazon hits $700B in trailing twelve-month revenue (possible with a strong Q4), it joins rare air. The question is whether cloud growth and advertising ($17.7B last quarter, up 24%) can carry the weight of that AI capex.