Amazon (AMZN) Q2 2025 Earnings: Strong Beat Overshadowed by Concerns

by MarketNewsData

Amazon (AMZN) delivered strong Q2 2025 results, beating expectations on both revenue and earnings. But the stock fell sharply, closing down 8.27% to $214.75, as investors focused on slowing AWS growth, margin pressure, and cautious guidance for the third quarter.

Earnings: Beat on Revenue and EPS

  • Revenue: $167.7 billion, up 13% YoY
  • EPS: $1.68 vs. est. $1.33 (beat by 27%)
  • Operating income: $19.2 billion, margin of 11.4%
  • Free cash flow: Fell sharply to $18.2 billion from $53 billion YoY

Segment Performance: AWS Growth Slows

  • AWS: $30.9 billion revenue, up 17.5% YoY
    • Operating margin dropped to 32.9%, down from 39.5%
    • Growth lags Microsoft Azure (+39%) and Google Cloud (+32%)
  • North America: $100.1 billion revenue, +11% YoY
  • International: $36.8 billion revenue, +16% YoY
  • Advertising: ~$15.7 billion revenue, +22% YoY

Guidance: Mixed Message

  • Q3 revenue: Forecasted at $174–179.5 billion (+10% to +13%)
  • Operating income outlook: $15.5–20.5 billion, below consensus (~$19.5B)
  • Ongoing heavy AI and infrastructure investments (~$31B capex in 2025)
  • Management cited macroeconomic uncertainties and tariff risks

Key Operational Highlights

  • Prime Day delivered record performance, aided by faster shipping expansion
  • AI tools like Alexa+, Nova Act, and Bedrock AgentCore rolling out
  • Signed major AWS cloud deals and progressing on Project Kuiper

Stock Reaction: Selloff Despite Beat

  • AMZN dropped 8.27% to $214.75, its worst single-day loss since early 2024
  • Pressure came from:
    • Slower AWS growth vs. peers
    • Margin compression
    • Conservative forward guidance
    • Decline in free cash flow

Peer Context & Takeaways

  • While Amazon’s core retail and ad units remain strong, AWS underperformance drew scrutiny
  • Azure and Google Cloud now outpacing AWS in growth, raising competitive concerns
  • Analysts remain bullish long-term, but investors reacted to short-term headwinds

Amazon’s Q2 beat was not enough to offset AWS deceleration and cautious outlook. Until cloud momentum and margins stabilize, the stock may remain under pressure despite strength in other segments.

More Live News