Live Earnings: Amazon (AMZN) Drops 2% After Earnings

It’s an absolute bloodbath for Amazon after hours. Shares are down 7%.

Overall, Amazon’s advertising and ecommerce businesses look solid.

Yet, the reality is they’re losing badly in cloud computing. While Jassy tried defending the company’s very poor growth rates relative to Microsoft and Google, Wall Street wasn’t buying it.

Jassy said time and time again that cloud computing was the biggest transformation of our lifetime, yet AWS has looked flat-footed in the market.

Is 7% an overreaction after-hours? Probably. Amazon is still a solid company.

Yet, after Microsoft delivered 39% growth yesterday, it certainly makes Amazon’s 17.5% growth rate that much more disappointing.

We’ll see if Amazon continues losing market share at this rate in the quarters ahead, but for now it looks like the AI laggard (alongside Apple) in the Magnificent 7 right now.

An analyst just asked Andy Jassy why AWS is trailing rivals like Azure.

As we’ve described several times in this live blog, Azure just grew 39% while AWS is growing at 17.5%. The bottom line is Microsoft is taking share.

Jassy’s answer essentialy boiled down to his belief most workloads would move to inference (running AI models) over time and Amazon is the much better options there. Here’s how he closed his extended anser on the question:

“There’s just so many more applications and data running in AWS than anywhere else. And I’m very optimistic about as we get to a bigger scale what’s going to happen to AWS on the AI side. And I think we have a set of services that is unique top to bottom in the stack. I think on the last part about what do we expect with respect to acceleration, we don’t give guidance by segment.

So I’m not going to try and give you guidance. But I do believe that the combination of more enterprises who have resumed their march to modernize their infrastructure and move from on-premises to the cloud, coupled with the fact that AI is going to accelerate in terms of more companies deploying more AI applications into production that start to scale, coupled with the fact that I do think that more capacity is going to come online in the coming months and quarters, make me optimistic about the AWS business.”

That continues to be good news for companies like NVIDIA and Marvell in addition to companies supplying power infrastructure.

Here’s Jassy’s full quote:

“On the supply constraints as it relates to AWS and what we see there, — as I mentioned, we have more demand than we have capacity at this point. And I think that — and you see some of the constraints and they kind of exist in multiple places, the single biggest constraint power. But you also see constraints off and on with chips and then some of the components that — once you have the chips to actually make the servers, the sometimes you have new generations of chips that are a little bit later than they’re supposed to be and sometimes you get the chips and the yield you get in making servers isn’t what you expect when you get to ramp. So there are a bunch of those pieces today that we’re working on.

It’s really true across the industry today. I don’t believe that we will have fully resolved the amount of capacity we need for the amount of demand that we have in a couple of quarters. I think it will take several quarters. But I do expect that it’s going to get better each quarter, and I’m optimistic about that. “

“Now turning to our cash CapEx, which was $31.4 billion in Q2. We expect Q2 CapEx to be reasonably representative of our quarterly capital investment rate for the back half of this year. AWS continues to be the primary driver as we invest to support demand for our AI services and increasingly in custom silicon, like Trainium, as well as tech infrastructure to support our North America and international segments. ” – Andy Jassy

It looks like Amazon has accelerated capital expenditure spend to a $120 billion run rate.

“Moving on to AWS. In Q2, AWS grew 17.5% year-over-year and now has over $123 billion annualized revenue run rate. We continue to help organizations of all sizes accelerate their transition to the cloud, signing new agreements with companies, including PepsiCo, Airbnb, Peloton, NASDAQ, London Stock Exchange, Nissan Motor, GitLab, SAP, Warner Bros. Discovery, 12 Labs, FICO, Iberia Airlines, SK Telecom and NatWest.”

“We deployed our 1 millionth robot across our global fulfillment network and unveiled innovations in our last-mile innovation center, such as automated package sorting and a transformative technology that brings packages directly to employees in an ergonomic height. We rolled out Deep [indiscernible], our AI improves robot travel efficiency by 10%. At our scale, it’s a big deal. Deep fleet acts like a traffic management system to coordinate robots’ movements to find optimal paths and reduce bottlenecks. For customers, it means faster delivery times and lower costs for our team members, our robots handle more of the physically demanding tasks, making our operations network even safer.”

“This combination of robotics and generative AI is just getting started. And while we’ve made significant progress, it’s still early with respect to what will roll out in the next few years.”

“Moving on to Amazon ads. We’re pleased with the strong growth, generating $15.7 billion of revenue in the quarter, growing 22% year-over-year. We continue to see strength across our broad portfolio of full funnel advertising offerings that in the U.S. alone help advertisers reach an average ad-supported audience of more than $300 million across our own properties. “

Amazon’s conference call is coming soon. We’ll post highlights.

To receive them: simply leave this blog open and an update will post after we’ve been able to listen in.

• Apple: Up 2.2%
• Amazon:  Down 3.1%
• Cloudflare: Up 5.5%
• Roku: Up 2%
• Reddit: Up 20.5%

“Our conviction that AI will change every customer experience is starting to play out as we’ve expanded Alexa+ to millions of customers, continue to see our shopping agent used by many millions of customers, launched AI models like DeepFleet that optimize productivity paths for our 1M+ robots, made it much easier for software developers to write code with Kiro (our new agentic IDE), launched Strands to make it easier to build AI agents, and released Bedrock AgentCore to enable agents to be operated securely and scalably.”

Andy Jassy

Amazon shares are now down about 4%.

It’s worth noting that Microsoft gained that exact amount today.

That’s some fitting commentary as Azure continues taking share from the company.

Amazon.com reported strong financial results for Q2 2025, with net sales increasing by 13% year-over-year to $167.7 billion.

The company’s operating income rose to $19.2 billion, a significant increase from $14.7 billion in the same quarter last year.

Net income also saw a substantial rise, reaching $18.2 billion, or $1.68 per diluted share, compared to $13.5 billion, or $1.26 per diluted share, in Q2 2024.

The North America segment sales grew by 11% to $100.1 billion, while the International segment sales increased by 16% to $36.8 billion. AWS continued its strong performance with a 17.5% increase in sales to $30.9 billion.

CEO Andy Jassy highlighted the company’s advancements in AI, including the expansion of Alexa+ and the launch of AI models like DeepFleet. The company also provided Q3 2025 guidance, expecting net sales between $174.0 billion and $179.5 billion, reflecting a growth of 10% to 13% year-over-year.

AMZN | Amazon.com Q2’25 Earnings Highlights:

• Adj. EPS: $1.68 [✅]; UP +33% YoY
• Revenue: $167.7B [✅]; UP +13% YoY
• Comparable Sales: +/-11% [✅]
• Adj. Gross Margin: 11.4% [✅]; UP +150 bps YoY
• Net Income: $18.2B [✅]; UP +35% YoY
• Operating Income: $19.2B [✅]; UP +30% YoY
• Free Cash Flow: $18.2B; DOWN -66% YoY
• Operating Cash Flow: $121.1B; UP +12% YoY

Q2’25 Outlook:

• Revenue: $174.0B to $179.5B [✅]
  • This guidance anticipates a favorable impact of approximately 130 basis points from foreign exchange rates.
  • Expected growth driven by continued demand in North America and AWS services.

Q2 Segment Performance:

• North America Revenue: $100.1B [✅]; UP +11% YoY
• International Revenue: $36.8B [✅]; UP +16% YoY
• AWS Revenue: $30.9B [✅]; UP +17.5% YoY

Other Key Q2 Metrics:

• Adj. Operating Income: $19.2B [✅]; UP +30% YoY
• Adj. Operating Expenses: $148.5B [✅]; UP +11% YoY
• Effective Tax Rate: 12.8% (vs. 11.6% YoY)
• Cash and Cash Equivalents: $61.5B; DOWN -21% YoY
• Inventories: $40.8B; UP +19% YoY

CEO Commentary:

• Andy Jassy: “Our conviction that AI will change every customer experience is starting to play out as we’ve expanded Alexa+ to millions of customers, continue to see our shopping agent used by many millions of customers, launched AI models like DeepFleet that optimize productivity paths for our 1M+ robots, made it much easier for software developers to write code with Kiro (our new agentic IDE), launched Strands to make it easier to build AI agents, and released Bedrock AgentCore to enable agents to be operated securely and scalably. Our AI progress across the board continues to improve our customer experiences, speed of innovation, operational efficiency, and business growth, and I’m excited for what lies ahead.”

Strategic Updates:

• Held its biggest Prime Day event ever, with customers saving billions of dollars and independent sellers achieving record sales.
• Announced expansion of Same-Day and Next-Day Delivery to tens of millions of U.S. customers in 4,000+ smaller cities, towns, and rural communities by end of 2025.
• Launched generative AI tools to enhance shopping experience, including “Hear the highlights” to turn product summaries and reviews into audio clips, and “Enhance My Listing” to keep listings current and compelling.
• Increased Project Kuiper’s satellite internet fleet in low earth orbit with two successful launches.
• Announced multi-billion dollar investments to expand cloud infrastructure and advance AI innovation in North Carolina, Pennsylvania, and Australia.

As a note, we won’t get capex numbers until Amazon’s earnings call. Whenever the company announces it could cause another move in shares.

Amazon shares are down about 2.3%. The company did rise 1.7% today, so its largely flat from where it closed before Microsoft reported.

That’s another sign of a healthy advertising market. Amazon’s three pillars are ecommerce / cloud/ advertising. So that’s one healthy end market for the company.

AWS sales came in at $30.87 billion. That’s slightly ahead of Wall Stret expectations but likely below the ‘whisper numbers’ that grew today after Microsoft’s results.

Alright, we’ve found why shares aren’t surging. Operating income guidance is for $15.5 billion to $20.5 billion. That midpoint is below Wall Street expectations of $19 billion.

Q3 Guide – $174-$179.5 billion

That’s another beat. As a reminder, here’s what Wall Street expected:

• Revenue: $173.2 billion
• Adjusted EPS: $1.52

Amazon beat on the top and bottom line and shares are choppy but flat at the moment.

Sales $167.7B vs $162.1B estimates

EPS $1.68 vs $1.32 estimates

The market is closed, we expect Amazon earnings very shortly and will be providing updates.

Amazon shares are up 2% in late trading after Microsoft’s outstanding earnings last night.

Clearly, Microsoft is taking market share from Amazon, but the big question is just how much. 

Azure grew at a 39% growth rate last quarter. The Street is modeling 17.1% growth for AWS versus 16.9% last quarter.

Our take is that Amazon needs to beat this number soundly if shares are going to rise tomorrow. Amazon may need to deliver growth more in the 19% to 20% range after Microsoft raised expectations yesterday.

Here’s what Wall Street expects when Amazon reports second quarter earnings tonight:

• Revenue: $162.1 billion
• Adjusted EPS: $1.32
• Operating Cash Flow: $31.1 billion
• Free Cash Flow: $9.16 billion
• Gross Margin: 50.6%

And looking forward, here’s what Wall Street expects Amazon to guide to for its Fiscal Q3 earnings:

• Revenue: $173.2 billion
• Adjusted EPS: $1.52