Amazon is set to report Q3 earnings after the closing bell on Thursday. The tech leader is expected to show strong retail results but some analysts have concerns about AWS. Wall Street is watching closely to learn about Amazon's AI progress. Amazon is among the handful of tech giants on deck to report earnings this week, and Wall Street is eager for updates amid the latest round of layoffs and the continued race for AI dominance. Amazon's stock performance has been volatile recently. It's up just 4 ...

Layoffs & Retrenchment - Major employers like Amazon and Target are retrenching, resulting in tens of thousands of office worker layoffs [1]

Market Reaction to Federal Reserve's Decision - The U.S. stock market experienced volatility after Federal Reserve Chairman Jerome Powell indicated that a rate cut in December is not guaranteed, leading to a decline in market sentiment [2] - The Dow Jones Industrial Average fell by 74.37 points, a decrease of 0.16%, closing at 47,632.00 points, while the Nasdaq rose by 0.55% to 23,958.47 points [2] Federal Reserve's Policy Changes - The Federal Reserve lowered the overnight benchmark interest rate by 25 basis points, bringing it to a range of 3.75% to 4%, marking the second rate cut of the year [2] - Powell highlighted strong internal disagreements among committee members regarding future policy direction, stating that the December meeting's decisions are not predetermined [2][3] Market Analysts' Perspectives - Analysts suggest that the market often overreacts to Federal Reserve announcements, emphasizing that any rate cut is not guaranteed and is data-dependent [3] - Concerns were raised about the current inflation levels being above the Fed's target, indicating that the market's previous pricing of future rate cuts may have been overly aggressive [3] Individual Stock Movements - Nvidia's stock surged by 3.0%, with its market capitalization exceeding $500 billion, following the announcement of a $1 billion investment in Nokia [4] - Nvidia's stock has increased by over 50% this year, leading the rise in AI-related stocks, with Apple and Microsoft also surpassing $4 trillion in market capitalization [4] Sector Performance - The storage sector saw significant gains, with Seagate Technology's stock rising by 19.1% after reporting Q3 revenue of $2.63 billion, a 21% year-over-year increase [5] - Conversely, Mondelez International's stock fell by 3.9% due to a decline in gross profit and a lowered full-year earnings outlook [5] International Market Trends - The Nasdaq China Golden Dragon Index experienced a slight decline of 0.03%, with Alibaba and Baidu seeing gains, while JD.com and NetEase faced losses [6] - International oil prices increased slightly, with WTI crude oil rising by 0.55% to $60.48 per barrel, and Brent crude oil up by 0.81% to $64.92 per barrel [6]

Core Viewpoint - Amazon plans to cut up to 30,000 corporate jobs starting Tuesday, as part of efforts to reduce costs following previous over-hiring [1][2] Group 1: Layoff Details - The layoffs will affect approximately 10% of Amazon's 350,000 corporate employees, marking the largest reduction since the company began layoffs in late 2022 [1] - The layoffs are expected to impact multiple departments, including the People Experience and Technology HR department, devices and services, and operations [2] - Amazon's HR department may face around 15% layoffs, indicating it could be a major area affected [2] Group 2: Financial Performance - Despite the layoffs, Amazon reported a 13% increase in net sales and a 229% year-over-year surge in net profit for Q1, with Q2 also showing a significant 101% profit growth [2] - The company is facing challenges despite strong financial performance, prompting a strategic shift towards automation and efficiency [2][3] Group 3: Strategic Initiatives - CEO Andy Jassy is pushing for a streamlined company structure to reduce bureaucracy and improve efficiency, with an anonymous feedback hotline receiving about 1,500 responses leading to over 450 process reforms [3] - The company is investing over $4 billion to double its delivery network by the end of 2026, focusing on small towns and rural areas [4] - Amazon plans to hire 250,000 seasonal workers to prepare for the upcoming holiday sales peak, maintaining the same scale as in the past two years [4] Group 4: Market Reaction - As of the latest market close, Amazon's stock price increased by 1.23%, reaching $226.97, with the company set to release its Q3 earnings report on Thursday [5]

Federal Reserve Actions - The Federal Reserve cut interest rates by a quarter point to a range of 3.75% – 4.00% in a 10-2 vote [1] - The Fed will end its asset purchase reduction, known as "quantitative tightening," on December 1 [1] Inflation Insights - Fed Chair Jerome Powell described inflation as "somewhat" elevated, noting it has eased significantly from mid-2022 highs but remains above the 2% target [2][3] - Powell indicated that higher tariffs are contributing to increased prices in certain goods, leading to higher overall inflation [3] - The Fed's current presumption is that inflation effects from tariffs will be short-lived, although there is a risk of more persistent inflation [4] Labor Market Observations - Powell characterized the labor market as "cooling" rather than in freefall, with no significant uptick in jobless claims or decline in job openings [10] - The Fed is closely monitoring the impact of AI on job creation, with many companies announcing hiring freezes or layoffs due to AI [10][11] - Recent headlines indicate significant job cuts across various companies, attributed to the adoption of AI technologies [12][13][14] AI and Job Displacement - Research indicates that up to 20-30 million jobs could be displaced by AI by 2035, representing nearly 20% of current U.S. payroll employment [21] - Jobs at high risk of automation include administrative support, customer service, and transportation, with millions of positions potentially affected [19][20] Investment Strategies - Companies that leverage AI for innovation are experiencing strong earnings despite lower headcounts, with the S&P 500 reporting positive earnings surprises above 10-year averages [15][16] - Investors are advised to align their portfolios with AI companies that are likely to benefit from the transition to advanced AI and robotics [24] - Caution is advised as not all companies associated with AI will be long-term winners; discerning investment choices is crucial [26][28]

Core Points - The Federal Reserve has lowered the federal funds rate target range by 25 basis points to between 3.75% and 4.00%, marking the second consecutive rate cut [3] - The Fed announced it will end its balance sheet reduction plan on December 1, with the principal repayments from mortgage-backed securities to be reinvested in short-term Treasury bonds [5] - There is a notable division within the Fed regarding future monetary policy, with some members advocating for a more aggressive rate cut while others prefer to maintain current rates [5][6] Economic Indicators - The Fed acknowledged a lack of official economic data due to the federal government shutdown, complicating its understanding of the economic situation [5] - Current indicators suggest moderate economic expansion, with employment growth slowing and a slight increase in the unemployment rate, although it remains low [5] - Inflation has risen slightly compared to earlier in the year, remaining above desired levels [5] Market Reactions - Following the Fed's announcement and comments from Chairman Powell, major assets experienced significant volatility, with the Dow Jones falling by 0.16% and the Nasdaq rising by 0.55% [8] - Large tech stocks mostly saw gains, with Nvidia rising nearly 3% and achieving a market capitalization above $500 billion [10] - The dollar index increased, surpassing the 99 mark, while U.S. Treasury yields also saw upward movement [10]

Amazon stock is badly lagging the rest of the Magnificent Seven over the last five years. Shares of the retail giant are up 43% in that time, compared to Nvidia's 1,521% gain. Amazon's earnings have held up, though investors are concerned it's slipping behind in the AI race. The Magnificent Seven gets a lot of credit for propelling the market's record-setting rally, but there's a clear laggard in the high-flying cohort. Among the biggest tech titans, Amazon is dead last in the ranking of stock retu ...

Group 1 - President Xi Jinping will meet with U.S. President Trump on October 30 to discuss U.S.-China relations and mutual concerns [5] - The U.S. Federal Reserve announced a 25 basis point cut in the federal funds rate target range to 3.75% to 4.00%, marking the fifth rate cut since September 2024 [5] - The U.S. stock market showed mixed results, with the Nasdaq rising by 0.55%, while the Dow Jones fell by 0.16% [6] Group 2 - The Chinese government is deepening capital market reforms and expanding financial openness to attract foreign investment [9] - The Ministry of Commerce and other departments released an action plan to enhance urban commercial quality, aiming for a well-structured urban commercial system [10] - The State Administration of Foreign Exchange introduced nine policy measures to facilitate cross-border trade and support foreign trade development [10] Group 3 - BYD launched a new electric K-Car model at the Tokyo Motor Show, marking its entry into the Japanese market [17] - Tencent released an AI assistant specifically designed for oracle bone studies, showcasing its commitment to innovation in artificial intelligence [19] - Meituan announced plans to build "official lightning warehouses" in collaboration with numerous brands to enhance instant retail capabilities [21] Group 4 - Meta reported third-quarter revenue of $51.24 billion, a 26% year-over-year increase, with advertising revenue also up by 26% [27] - Alphabet's third-quarter revenue reached $102.35 billion, a 16% increase, with Google Cloud revenue at $15.16 billion [28] - Microsoft reported third-quarter revenue of $77.67 billion, an 18% year-over-year increase, with net profit at $27.75 billion [29]

Core Viewpoint - Amazon is currently underperforming compared to its peers in the Magnificent Seven, but there are signs that it may be poised for a rebound as it approaches its upcoming earnings report [1][11]. Earnings Expectations - Analysts anticipate earnings of $1.57 per share, reflecting a 9.8% year-over-year increase, with revenue projected at $177.9 billion, a 12% rise from the previous year [3]. - Earnings estimates have recently improved, contributing to Amazon's Zacks Rank of 2 (Buy), indicating a positive sentiment leading into the earnings report [3]. Valuation and Technical Analysis - Amazon's stock is currently trading at a forward earnings multiple of 33.3x, which is considered attractive historically, given its diversified growth in e-commerce, cloud computing, and digital advertising [2]. - The stock has been consolidating below resistance levels since early summer, and a strong earnings report could trigger a breakout from this consolidation phase [10]. AI Integration and Operational Efficiency - Jeff Bezos remains engaged in Amazon's strategic direction, particularly in the integration of artificial intelligence (AI) across its operations, which is seen as a key growth driver for Amazon Web Services (AWS) [5][6]. - The company is focusing on enhancing logistics and productivity through AI, which may lead to increased operational efficiency, as evidenced by recent layoffs of approximately 30,000 employees [6]. Earnings Momentum and Future Growth - Amazon has consistently beaten analyst expectations for 11 consecutive quarters, with an average surprise of 23% over the past year, suggesting strong earnings momentum [8]. - Future earnings are projected to grow at an annual rate of 22.2% over the next three to five years, the second-highest growth rate among the Magnificent Seven, with sales expected to continue expanding at a double-digit rate [9]. Market Position and Competitive Landscape - Amazon is at a critical juncture, with the potential to leverage its earnings power, operational leverage, and AI-driven advantages to catch up with faster-growing competitors like Alphabet and Tesla [11][12]. - If the upcoming earnings report confirms improving margins and growth in AWS and retail operations, Amazon could rejoin its peers in leading the next phase of the Magnificent Seven rally [12].

Markets are in the midst of the busiest week for third quarter earnings, with results from several Big Tech companies highlighting the calendar. So far, the earnings season is off to a positive start. As of Oct. 24, 29% of S&P 500 companies have reported results, according to FactSet data, and analysts are expecting a 9.2% jump in earnings per share during the third quarter. If that figure holds, it would mark the ninth straight quarter of positive earnings growth but a deceleration from the 12% earnings ...