Amazon 2Q 2017 earnings are set for release after closing bell on Thursday, and analysts are looking for earnings of $1.41 per share on $37.2 billion in revenue. In last year’s second quarter, the online retailer reported $1.78 per share in earnings on $30.4 billion in sales. Amazon guided for sales of $35.25 billion to $37.75 billion for the quarter.

Amazon 2q 2017 earnings
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Amazon 2Q 2017 earnings to show continuing momentum

Wedbush analyst Michael Pachter notes that Amazon has seen strong momentum across its segments, including in third-party seller services, Prime subscriptions and Amazon Web Services. This strong momentum indicates that the company has strong growth potential in the long term.

During the first quarter, the company reported $6.44 billion in third-party seller service revenues, marking a 34% year-over-year increase. In each of last year’s fourth quarters, growth in this area ranged from 39% to 48%. Subscription revenue in the first quarter came in at $1.94 billion, a 49% increase versus last year’s 33% to 56% growth rates in each of the four quarters. AWS revenues grew 43% to $3.66 billion, compared to the 47% to 64% increases in last year’s four quarters.

Search index also points to continued strong growth

Piper Jaffray analyst Michael J. Olson said in a note dated July 25 that his Amazon Search Index points to second-quarter unit growth at 24%, which matches the first-quarter result. It also suggests FXN retail revenue growth of 22% to 23%, which is consistent with consensus. His index is the result of an analysis of Google Search trends for Amazon.

He also reports that his “principal component regression analysis” has had an 0.95 correlation with Amazon’s reported unit growth over the last 37 quarters.

What about Amazon’s third-quarter outlook?

The Amazon 2Q 2017 earnings report will likely include guidance for the third quarter, and Pachter expects $40.54 billion in sales, which is a bit higher than the consensus at $39.93 billion. He pegs sales from the company’s annual Prime Day shopping festival this year at $1.6 billion, compared to $1 billion last year. As a result, he believes Prime Day sales to drive a slight beat on the company’s sales outlook for the third quarter.

Looking a bit further out from Amazon 2Q 2017 earnings, Olson added Whole Foods into his model for the online retailer starting in the fourth quarter. Amazon announced last month that it struck a deal to acquire the brick-and-mortar grocery store chain. Olson believes that it will speed up the e-commerce giant’s “pursuit of grocery delivery and other fulfillment methods, which will necessitate a significant distribution buildout.” As a result, he slashed his GAAP operating margin estimate for the first half of next year, pushing it down to 3.7% from 5%. The Street pegs this metric at 4.1%.

Although he feels that the Whole Foods acquisition was the right decision to create more value for shareholders, he notes that it causes headwinds on Amazon’s margins in the near term.

On Wednesday before the Amazon 2Q 2017 earnings, the online retailer’s stock jumped by as much as 1.03%, rising as high as $1,050.35 during regular trading hours.