Amazon (AMZN) Earnings: Growth Drivers, AI Investments, and Market Outlook

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A forward-looking analysis of Amazon's (AMZN) Q2 2025 earnings, scheduled for release on July 31, 2025, at 2:00 PM PT/5:00 PM ET.

Amazon is expected to show growth in revenue and earnings, thanks to its profitable Amazon Web Services (AWS) and advertising businesses. However, big spending on AI infrastructure and new tariffs affecting its e-commerce and third-party sellers bring both opportunities and challenges. The company’s focus on cutting costs and improving customer experience, especially through its Prime program, will be key to managing a tough economic climate.

Source: Created by Zain Vawda, Google Gemini

What to Expect?

Amazon’s Q1 2025 results showed strong growth and profitability. Net sales rose 9% year-over-year to $155.7 billion, slightly beating estimates. AWS led the way with a 17% sales increase to $29.3 billion, while North America and International segments grew 8% and 5%, respectively.

Operating income surged 20% to $18.4 billion, exceeding expectations by 20.2%, thanks to cost-cutting efforts like regionalization and same-day facilities. Net income jumped to $17.1 billion ($1.59 per share), up from $10.4 billion ($0.98 per share) in Q1 2024, beating the $1.37 forecast.

These results highlight Amazon’s focus on efficiency and profitability, setting a strong foundation for Q2 expectations.

With that being said, analysts and Amazon expect growth in Q2 2025, but with some caution due to economic uncertainties.

Analyst Estimates:

EPS: Expected at $1.33, up 8.13% from $1.23 in Q2 2024. Amazon has beaten EPS estimates for the last four quarters.

Revenue: Forecasted at $162.28 billion, a 9.67% increase from $147.98 billion last year.

Operating Income: Predicted at $16.7 billion, up 13.8%, with an improved margin of 10.6% (from 9.9%).

Amazon’s Guidance:

Net Sales: Estimated between $159.0 billion and $164.0 billion, growing 7%-11%, with a small impact from currency changes.

Operating Income: Projected between $13.0 billion and $17.5 billion, reflecting uncertainty.

The wide range for operating income shows Amazon’s cautious approach, considering economic challenges, tariffs, and high spending on AI. Investors will focus on how results compare to the midpoint of this guidance to understand Amazon’s outlook.

Key Areas to Focus On - AWS, E-commerce, and Challenges

Amazon’s AWS remains its top profit driver, with Q1 2025 revenue up 17% to $29.3 billion. However, its cloud market share dipped to 29% (from 31% in 2024). AWS’s operating margin is expected to drop to 35% in Q2 due to heavy AI investments, part of Amazon’s $100+ billion 2025 capital expenditure plan. AWS is expanding AI services, including new chips and partnerships with Nvidia, to capture the growing AI market.

Source: Created by Zain Vawda, Google Gemini

In e-commerce, Amazon’s Prime Day 2025 saw strong overall spending, but average order values slightly declined. Prime membership grew 9% year-over-year, reaching 220 million globally, with members driving consistent revenue. Advertising revenue also rose 18% in Q1, highlighting Amazon’s ability to monetize its platform.

Source: Created by Zain Vawda, Google Gemini

Operational efficiency improved, with reduced fulfillment costs and faster delivery speeds boosting profitability. However, new U.S. tariffs are raising costs for sellers, especially those importing from China, leading to higher prices and supply chain disruptions. These tariffs could impact Amazon’s marketplace growth and seller participation.

Macroeconomic pressures, including slower consumer spending and a cooling labor market, add to challenges. Amazon’s cautious Q2 guidance reflects these headwinds, but its focus on efficiency, AI, and customer loyalty positions it to navigate these hurdles while driving long-term growth.

Forward Outlook

Amazon’s future focuses on big investments in AI and operational efficiency. In 2025, it plans to spend over $100 billion, mainly on AWS and AI services, to stay ahead in cloud computing. By developing its own chips like Trainium2 and partnering with Nvidia, Amazon aims to offer better, cost-effective AI solutions, attracting more enterprise customers. While this may lower short-term margins, it secures long-term growth.

Source: Created by Zain Vawda, Google Gemini

Amazon is also improving logistics with drone delivery and same-day facilities, cutting costs and boosting delivery speed. These efforts enhance customer satisfaction and keep Amazon competitive in e-commerce despite rising tariffs and competition.

CEO Andy Jassy sees AWS as a future multi-billion-dollar business, with AI driving growth. New products like Alexa+ and personalized services aim to improve customer loyalty and sales. Analysts remain optimistic driven by AWS, advertising growth, and AI’s long-term potential.

Source: Created by Zain Vawda, Google Gemini

Technical Analysis

From a technical standpoint, Amazon are not far off the YTD highs posted in February.

There is a trendline that may come into play but for now earnings could be the shot in the arm needed for a retest of the YTD highs.

Looking at the period-14 RSI, it is also hovering in no mans land between overbought territory and the neutral 50 level.

Immediate support rests at 223.82 before the 207.31 and 200.00 handles come into focus.

Immediate resistance may be found at the recent swing around the 236.00 handle before the 242.52 YTD high comes into focus.

Amazon Daily Chart, July 31, 2025

Source: TradingView

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

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