Amazon earnings preview: Q1 2026

Amazon Q1 earnings preview: What’s happening to margins?

According to Visible Alpha consensus, total revenues for North America of $102.1 billion expected for Q1 have edged upward since the October release, driven by resilience in Amazon's (NASDAQ: AMZN) online retail business. Expectations for both North America and International online retail segments have remained stable since last quarter. Consensus for AWS also has remained around $36.8 billion. The focus will likely be on the Q1 2026 performance and Q2 2026 outlook for the online retail and AWS margins and their impact on EPS growth.

The North America retail operating profit margin has increased significantly from losses a few years ago to an estimated 6.5% for Q1 2025, a 100bps decline since late January. For Q1, the estimated margin expectations have widened substantially to a range of .9% to 7.8%, with consensus at 6.5%. The International operating profit margin range is more extreme at .2% to 14.7%, with consensus settling at 3.2%. The debate about the impact of Middle East conflict and tariffs is captured in the significant range of margin estimates for these segments.

The AWS margin for Q1 is expected to be 35.7%. It has come down from the 37.7% level expected in October. The range of estimates for the Q1 AWS margin has also widened to 30.9% to 40.0% with consensus at 35.7%, reflecting debate about the continued demand for AI and cloud services.

We are closely watching how the company will guide Q2 2026 and what the company will say about its investments into AI, as Amazon’s FY 2026 CapEx numbers have continued to increase. According to consensus projections, CapEx estimates have expanded almost 4x from $52.7 billion in FY 2023 to currently nearly $200 billion in FY 2026. Given the current backdrop and increasing energy prices, there are questions about whether the Company will maintain its full year CapEx guidance.

The stock has traded up 4% since last quarter. The consensus P/E for 2027 is 26x and a target price of $285. Could the Q1 release provide a catalyst for the stock?