All eyes will be Amazon.com Inc.’s cloud business when the technology giant reports earnings on Thursday, after shares of Microsoft Corp. plunged last week due in part to slowing growth at its key cloud-computing platform.
This was not an issue for Amazon’s October earnings, as its shares jumped almost 10% following better than expected revenue from Amazon Web Services, also known as AWS. Now, however, fear is rippling through the tech sector, and Amazon investors are increasingly concerned that the slowdown at Microsoft’s Azure indicates broader weakness for cloud providers. Microsoft shares are down 14% since the report on Jan. 28, erasing more than $500 billion in market value.
“It isn’t clear how much of Microsoft’s disappointment might be due to company-specific issues and how much might reflect an overall slowing in the cloud space,” said David Miller, chief investment officer at Catalyst Funds, which holds Amazon shares in several portfolios. “If it’s the latter, that could carry over.”
Amazon shareholders are seeking catalysts for a stock that has been languishing for a while. It was the worst performer among the Magnificent Seven tech giants last year, rising just 5.2%, and is up less than 1% to start 2026. By comparison, the Nasdaq 100 Index jumped 20% in 2025, while the S&P 500 Index gained 16%, although Amazon is slightly outperforming both this year.
Wall Street expects Amazon to report a 21% year-over-year increase in AWS revenue in the fourth quarter to $34.8 billion. For the company as a whole, analysts project a 13% jump in fourth-quarter revenue to $211.5 billion and an 8% increase in adjusted earnings per share to $2.40.
On Wednesday, Alphabet Inc. reported strong cloud growth in its latest earnings, but the stock dipped in extended trading after the Google parent also said it plans to spend far more than expected on 2026 capital expenditures, the other issue hanging over tech shares.
Amazon’s results come against a backdrop of anti-software sentiment that’s weighing on the entire tech sector as investors try to sort the winners and losers from the hundreds of billions of dollars being spent to develop artificial intelligence. Microsoft’s aggressive AI-related capital expenditures, alongside the slowing Azure growth, invited new questions about when these investments will pay off more substantially.
“It’s really about what’s already priced into the stock, and I think what was starting to price in for [Microsoft] was a higher growth rate, which is always a little dangerous,” said Melissa Otto, head of technology, media and telecommunications research at Visible Alpha. “We haven’t really seen Amazon moving up in the same way.”
Indeed, Amazon shares are relatively cheap based on their history. The stock trades at about 24 times forward earnings, far below its 10-year average multiple of 46. The Nasdaq 100 trades at 24 times forward earnings. However, the company will likely have to post very strong results to reverse that valuation trend.
“It’s clear that investors are looking for extraordinarily high growth rates, and growth that’s merely high isn’t enough to satisfy expectations,” Catalyst Funds’ Miller said. Options data compiled by Bloomberg indicates the shares could move about 7% in either direction following the report.
Beyond cloud growth, investors will also be watching for Amazon’s margin expansion and signs of strength in its retail business, underscored by Rufus, the company’s AI chatbot. In addition, updates on the company’s capital expenditures for the coming year, its investment in Anthropic PBC and a potential $50 billion investment in OpenAI will be under the microscope.
Amazon invested $8 billion in Anthropic, the maker of the Claude chatbot and co-working tools, in November 2024, and it could give the earnings a lift due to the increased value of the stake. Amazon’s third-quarter profit climbed 38%, helped by a $9.5 billion pretax gain on the investment. Anthropic is in talks to raise $10 billion in a new funding round that would value the company at $350 billion.
While Amazon’s other revenue lines could cushion an AWS miss, the cloud business is still likely to command the most investor focus and scrutiny.
“They definitely have some diversification, but cloud and AWS is kind of their jewel,” said Dec Mullarkey, managing director at SLC Management. “So they will have to show a steady and pretty forthright, you know, picture about where that’s going because that will be the focus.”
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