How might the expansion influence Amazon’s earnings guidance and FY2025 outlook?

Impact on earnings guidance & FY 2025 outlook

The same‑day grocery rollout adds a high‑margin, high‑frequency line‑item to Amazon’s already‑large “Prime” ecosystem. By tapping 1,000+ cities now and targeting 2,300 by year‑end, the company can convert a sizable share of its 200 + million Prime base into repeat grocery spend—an area that historically yields a 3‑4 % higher gross margin than core retail. Management will likely factor the incremental grocery volume into its FY 2025 revenue forecast, nudging top‑line growth out of the low‑single‑digit range that analysts have been modelling (≈ 2‑3 % YoY).

However, the logistics cost‑structure for perishable items is still heavier than for “dry” goods. Same‑day fulfillment will raise last‑mile expenses and inventory‑shrinkage risk, compressing operating margin in the short term. The net‑effect is a modest earnings‑per‑share (EPS) uplift—perhaps 1‑2 % versus the current guidance—offset by a slightly lower operating‑margin expansion. In practice, we should expect Amazon to issue a “slightly above‑market‑expectations” earnings guidance that emphasizes “accelerated grocery growth” while warning that margin expansion will be incremental until the network reaches scale.

Trading implications

• Fundamentals: The grocery expansion is a catalyst for incremental revenue and a higher‑margin mix, which should improve the “earnings outlook” narrative for FY 2025. The upside is most pronounced if Amazon can sustain the same‑day model without a proportional surge in fulfillment costs.
  
• Technical: Since the announcement, AMZN has held a tight range around $1,750‑$1,800 with a bullish 1‑month RSI (≈ 68) and a breakout of the 20‑day EMA. The next key technical hurdle is the $1,850 resistance—breakout could signal market acceptance of the growth story and price‑in the revised guidance. Conversely, a dip back below the 50‑day EMA (~$1,720) would suggest investors are still skeptical about margin drag.
  
• Actionable view: Keep a light‑to‑moderate long position with a stop just below the 50‑day EMA. If Amazon’s FY 2025 guidance comes out with a “+2 % grocery contribution to revenue” and a modest margin lift, the upside to $1,900–$2,000 is attractive. If guidance is muted or margin compression is highlighted, consider trimming or shifting to a neutral stance until the next earnings cycle.
  

In short, the grocery expansion should nudge Amazon’s earnings guidance upward and add a modest boost to the FY 2025 outlook, but the net effect will be tempered by higher fulfillment costs. Traders can capture the upside on a breakout while protecting against a pull‑back if the cost side‑effects dominate.