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Amazon Earnings On Deck. Did Microsoft's Strong Results Raise The Bar For Cloud Growth?

Amazon (AMZN) stock rose early Thursday ahead of the tech giant's earnings report due after the closing bell. The company appeared to get a boost from Microsoft (MSFT)'s Wednesday report which offered a positive signal for Amazon's closely watched cloud division.

Revenue for Microsoft's Azure cloud business grew 35% in constant currency for the March quarter, outpacing analyst estimates of 31.4% growth. The results propelled Microsoft shares nearly 10% higher in morning trading Thursday. Amazon stock, meanwhile, was up 3% at 190.09 in recent action on the stock market today.

↑ X NOW PLAYING Tariffs Take Toll On Tech Giants. Will Earnings Reveal The Damage?

Amazon Web Services is the world's largest provider of cloud computing services, followed by Microsoft Azure. The strong performance by Azure likely increased expectations for AWS ahead of Amazon's report Thursday, according to Citizens JMP analyst Nicholas Jones.

"We believe investors are looking for AWS growth of at least 20% in Q1, based on the trend of the AWS-to-Azure growth ratio and Q2 AWS guidance of 20%+ growth as well," Jones wrote in a client note Thursday. "Additionally, we will be listening for commentary and any change in AMZN's investment plans for the remainder of the year; recall that Amazon expects to spend roughly $100B on capex in 2025 with the majority being spent on infrastructure to support AWS growth."

Here's what else to watch from Amazon's report:

Amazon Q1 Numbers To Watch

Analysts on average project that AWS grew 17.6% year-over-year in Q1 to $29.45 billion in sales, according to FactSet.

The growth rate for AWS is always a focus of investors because the cloud business is a major profit driver for Amazon. Last year the cloud business accounted for 17% of Amazon's total revenue but 58% of its total operating income.

But Amazon investors are also jittery about the impact of tariffs on the company's massive e-commerce business.

Amazon stock entered Thursday down 16% this year and 6% since April 2's "Liberation Day," when President Donald Trump announced his broad tariff plan. Trump has paused some of those tariffs – helping Amazon and other stocks recoup some losses – but 145% levies on Chinese goods are still in place.

With an estimated 50% of its third-party sellers based in China, calculating the broader impact for Amazon from triple-digit tariffs on Chinese imports is "nearly impossible," William Blair analysts recently warned.

That means that investors will be keyed-in on the company's guidance for second quarter sales. Right now, analysts project that Amazon will post $161.2 billion in June-quarter sales, according to FactSet.

For the March-ended quarter, Amazon is projected to post adjusted earnings of $1.37 per share, up 39% from a year earlier. Sales are seen rising 8% to $155.15 billion.

Chief Executive Andy Jassy's commentary will also be closely parsed. Jones of Citizens JMP said investors will be watching if the company sticks by its big AI-focused investment plans. Jassy appeared bullish on the company's AI investments in a recent letter to investors.

Meta Platforms (META) on Wednesday increased its capex guidance for the year, indicating tech giants aren't ready to back down from their big AI bets.

Amazon Stock Approaches 50-Day Moving Average

Meanwhile, Amazon stock is trading roughly 2% below its 50-day moving average with Thursday's early gains, according to MarketSurge charts by Investor's Business Daily. Amazon has not traded above that trendline since February 14.

The current slump for Amazon stock began with its fourth-quarter results in early February. The December-quarter results beat earnings estimates but included a lower-than-expected sales forecast for Q1. Shares have tumbled 24% from a record high of 242.52 reached Feb. 4.

Amazon stock had an IBD Composite Rating of 81 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.