Amazon Layoffs Draw Wall Street Attention Ahead Of Earnings On Thursday

• Amazon is reporting third-quarter results on Thursday, with Wall Street expecting the company’s revenue to come in at $177.76 billion and earnings per share of $1.56, according to data from Fiscal AI.
• The company on Tuesday said it would reduce its corporate workforce by about 14,000 roles, building on a recent slew of job cuts the company has undertaken.
• In June, Jassy had said that there would be a reduction in the total corporate workforce as the company rolls out more generative AI and agents.

Amazon.com (AMZN) is set to report quarterly results on Thursday, but Wall Street is now focusing on the company's layoffs announced this week, which were undertaken as the e-commerce and retail giant invests heavily in artificial intelligence.

“Investors are on the look-out for evidence from companies that their investment in AI is generating revenues, cost benefits or both, and Amazon’s round of layoffs may well be seen as an example of efficiency improvements that stem from AI,” Russ Mould, investment director at AJ Bell, told Stocktwits.

“That in turn could be seen as a positive for all parts of the AI ecosystem and supply chain, as it could fuel yet further spending on everything from data centres to servers to chipsets to energy and the grid,” Mould said.

Amazon on Tuesday said it would reduce its corporate workforce by about 14,000 roles, building on a recent slew of job cuts the company has planned to save costs and increase investment in AI.

Retail sentiment around Amazon on Stocktwits remained unchanged in the ‘bullish’ territory, with message volumes at ‘normal’ levels. Shares of the company were marginally higher on Wednesday at the time of writing.

Wall Street Awaits Andy Jassy’s Take

Last year, CEO Andy Jassy said that as the company’s teams grew quickly and substantially, it added many managers and, in the process, more layers than before. Jassy had then noted that having fewer managers would remove layers and flatten the organization, while increasing teammates’ ability to move fast and decreasing bureaucracy.

Jamie Meyers, senior analyst at Laffer Tengler Investments, said in an emailed response to Stocktwits that the trend of thinning out middle management is happening everywhere in financials, industrials and tech. “As people are able to do more work with fewer resources (and people), we expect that trend to accelerate. Corporate structures need to be simplified, and AI is allowing companies to do that,” said Meyers.

In June, Jassy said there would be a reduction in the total corporate workforce as the company rolls out more generative AI and agents. “We will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs," said Jassy.

“It will be interesting to see if boss Andy Jassy gives more colour on the rationale for the job cuts and Amazon’s capex plans,” Mould added.

Amazon is reporting third-quarter results (Q3) on Thursday, with Wall Street expecting the company’s revenue to come in at $177.76 billion and earnings per share (EPS) of $1.56, according to data from Fiscal AI.

Mould added that it would certainly be a “nasty shock” if it turned out that the company was cutting staff because its quarterly results or financial outlook were disappointing, as that could mean the economy isn’t as strong as markets like to think.

AI The Fall Guy?

Wall Street, however, thinks that some of them might be using AI as a reason to trim costs. “Job cuts and layoffs happen in large doses, while the hires tend to be one-offs, even if the hires are greater than the layoffs. Everyone will look for someone or something to blame, and AI is the fall guy,” Brian Jacobsen, Chief Economist at Annex Wealth Management, told Stocktwits.

“The reality is that executives are looking to cut costs and AI could just be a convenient excuse,” Jacobsen added.

Shares of Amazon have gained over 19% in the last 12 months.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Also See: Fiserv Shares Plunge 44% In Record One-Day Drop As Company Gets Wall Street Downgrades On Leadership Changes, Forecast Cuts

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