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.
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.
Apart from the headline numbers and Q1 guidance, I would watch out for the following during Amazon’s Q4 earnings call:
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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.
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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.
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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.
