Amazon reports Q3 2026 earnings on Oct. 29, and Motley Fool analyst Will Healy says the stock is probably a buy ahead of the report. He points to the stock's past reactions to Q3 results and a forward P/E of 31. He also flags concern over the company's capital spending and the AI sell-off.
Amazon reports Q3 2026 earnings on Oct. 29, after the bell. Healy, writing for The Motley Fool, argues that the stock is probably a buy before the release.
Late-October reports have lifted the stock
His case rests on history. After each of the previous three Q3 reports, released in late October, the stock has risen significantly the next day.
Still, Healy calls this pattern no guarantee. An earnings miss in Q4 of last year led to a decline after the announcement.
Capex and AI worries cloud the setup
Shareholders have become increasingly concerned about spending. Amazon pledged $220 billion in capital expenditures for this year, which Healy says has strained its finances. Investors are wondering where the capex budget goes from here.
Moreover, Healy writes that it is unclear how a recent sell-off in AI-related stocks may affect Amazon.
AWS carries the profit
Amazon Web Services (AWS) remains the focus. Despite making up just 21% of Q2 revenue, it accounted for the majority of operating income. Meanwhile, AWS revenue grew by 37% annually in the latest quarter, up from 17.5% in the year-ago quarter.
Forward P/E sits at 31
Valuation adds to the argument, and it centers on the P/E ratio. A $53.4 billion pre-tax gain on Amazon's Anthropic investment inflated Q2 net income and pushed the trailing P/E down to 20.
Healy calls the forward P/E of 31 the more meaningful figure. He says it is low compared with past years, when Amazon routinely traded above 50 times earnings, and that this raises the likelihood of a favorable reaction to the report.
In an uncertain environment for AI stocks, Healy writes, anything can happen.
Source: The Motley Fool
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