Earnings Watch: One company could determine if U.S. corporate profits rise to a record next year

by | Dec 11, 2022 | Stock Market

As Wall Street looks toward 2023, earnings growth for the companies that make up the S&P 500 index could hinge on just one of them: Amazon.com Inc. Amazon
AMZN,
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the online retail giant whose stock has fallen 46% so far this year on concerns about shakier e-commerce demand, is expected to be the biggest contributor to gains in the index’s Consumer Discretionary sector, FactSet reports. That sector, in turn, is expected to be the biggest earnings gainer in the index overall, according to FactSet.

“At the company level, Amazon.com is expected to be the largest contributor to earnings growth for the sector for the year, accounting for almost half of the projected earnings growth for the sector,” FactSet Senior Earnings Analyst John Butters wrote in a report on Friday. As this column reported last week, Wall Street analysts expect profits to hit a record this year and next year, despite fears of a recession and inflationary pressures on consumers. Of the 11 sectors tracked by FactSet, the S&P 500’s Consumer Discretionary sector is expected to turn out the biggest year-over-year earnings growth next year — 35.8%. Without Amazon, the earnings increase for that sector would shrink to 18.6%. But for Amazon to do that kind of heavy lifting, it will have to find ways to entice consumers who have been more reluctant to click away buying things online. And it will have to find ways to draw bigger gains out of its cloud-s …

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