What happened
Shares of Amazon (AMZN 1.30%) were moving higher today, even though there was no major news out on the tech giant.
Instead, the stock seemed to rise in sympathy with Meta Platforms (META 2.98%), which surged after reporting earnings last night. With Amazon's earnings report due out after the market closes today, investors are hoping it can benefit from similar tailwinds.
As of 12:11 p.m. ET, Amazon stock was up 6.2%, while Meta stock was up nearly 25%.
So what
FAANG stocks seem to be back in favor after the group of big tech stocks had a dismal 2022. What was notable about Meta's surge is that the results themselves were mediocre. Its revenue fell 4% but rose 2% in constant currency, and earnings per share plunged 52%, or 18% after adjusting for $4.2 billion in restructuring expenses for layoffs and the closure of offices and data centers.
Investors were encouraged by the company's renewed commitment to controlling costs and driving profitable growth, and they're hoping Amazon can pull a similar trick when it reports earnings.
Like Meta, Amazon also announced major layoffs over the last few months, cutting ties with 18,000 corporate employees, which could give a much-needed boost to its profitability after the company saw revenue growth slow and losses in its e-commerce division widen through 2022.
Now what
Analyst estimates are low coming into Amazon's fourth quarter, but that could give the company an easy bar to jump over. The consensus calls for revenue growth of 5.8% to $145.4 billion and earnings per share to fall from $1.39 to $0.17.
Meta and Amazon aren't close competitors, so today's gains in Amazon stock may seem a bit spurious, but if Amazon can beat estimates and similarly reassure investors that it's controlling costs, the stock could continue to surge.
Though Amazon stock has already gained nearly 40% from its low in December, it's still down from its all-time high by roughly the same percentage. Expect the stock to swing one way or another on today's report.
