Here's our initial take on Amazon's (AMZN -8.74%) financial report.
Key Metrics
| Metric | Q2 2024 | Q2 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $148.0 billion | $167.7 billion | 13% | Beat |
| Earnings per share | $1.26 | $1.68 | 33% | Beat |
| AWS revenue | $26.3 billion | $30.9 billion | 17% | Met |
| Advertising revenue | $12.8 billion | $15.7 billion | 23% | n/a |
Amazon's Focus on AI Implementation and Payoff
Investors had big expectations for Amazon, and in particular the company's AWS cloud unit, following strong results from Microsoft (MSFT -1.86%). Amazon revenue and earnings were up 13% and 33%, respectively, beating expectations, and AWS sales grew by 17% to $30.9 billion.
Amazon's release boasted about its largest Prime Day to date and new partnerships including a Nike (NKE -0.79%) storefront. But the focus was clearly on AI. CEO Andy Jassy in a statement said that "our conviction that AI will change every customer experience is starting to play out," noting the company's moves not just at AWS but across Alexa, robotics, and other areas.
Amazon sees more growth ahead, predicting net sales to come in between $174 billion and $179.5 billion in the current quarter. That would be up 10% to 13% from a year ago, and even at the low end is above the $173 billion consensus.
But all of that growth is coming at a price. Operating expenses in the quarter were up 11% to $148.5 billion, and free cash flow decreased to $18.2 billion for the trailing 12 months, from $53 billion a year ago. AWS's operating margin for the quarter fell to 32.9%, from 35.5% a year ago.
Operating income in the current quarter is expected to come in between $15.5 billion and $20.5 billion. At the midpoint that suggests little growth over last year's $17.4 billion, and is slightly below analyst expectations.
Immediate Market Reaction
Investors were underwhelmed by the results. Amazon shares fell 3% in aftermarket trading following the release of the report but ahead of the company's call with investors.
What to Watch
The AWS growth, while impressive, on a percentage basis fell short of Microsoft's reported 34% growth at Azure. Microsoft surged post-earnings because the company successfully articulated the benefit of all of the AI spending. Investors will be eager to hear Jassy and other Amazon execs make the same case on the earnings call.
Amazon is a lot more than AWS, posting 11% growth in product sales to $68 billion, while its advertising business was up 23% year over year.
The company remains well positioned on many fronts, and is set up well to be a long-term winner. But in an environment where all eyes are on the investment -- and payoff -- of AI, investors have set a high bar on results and outlook.
