What to expect from Amazon's earnings report as AWS faces pressure from rivals

Core Insights - Amazon is under pressure to demonstrate that its AI investments are yielding tangible returns, especially in light of Alphabet's increased capital expenditures and subsequent investor rewards [2][11] - Amazon Web Services (AWS) remains the leading cloud provider, but it is losing significant workloads to competitors like Google and Microsoft [3][5] AWS Performance and Strategy - AWS revenue is projected to grow by just over 18%, while Google Cloud and Microsoft Azure are experiencing growth rates of 34% and 40%, respectively [5] - Amazon's infrastructure investments, including an $11 billion data center in Indiana, are aimed at supporting AI models, but there are concerns about whether these investments will translate into sufficient AWS revenue to maintain its market lead [5][6] Competitive Landscape - Major clients like Meta are signing substantial deals with competitors, such as a $10 billion agreement with Google, indicating a shift in workload preferences [3] - OpenAI is diversifying its cloud computing needs among Google, Azure, and Coreweave, which raises questions about Amazon's competitive positioning [4] AI and Compute Capabilities - Amazon's current AI strategy lacks clarity beyond its cloud offerings, and it is competing against companies like Nvidia, which have more advanced computing capabilities [2][8] - Analysts suggest that Amazon may need to acquire companies like Anthropic to enhance its competitive edge in AI [9][10] Retail Business Outlook - The retail segment is not the primary focus for investors, but there are expectations for growth in e-commerce, particularly as the holiday season approaches [12][13] - Bank of America projects that Amazon's e-commerce business has grown during the quarter, which could provide a positive offset to losses in other areas [13]