Amazon recently reported its first-quarter earnings for 2025, showcasing a mix of positive results and concerning forecasts. Despite beating earnings expectations, the company's stock fell over 2% in after-hours trading due to soft guidance and ongoing tariff concerns affecting its retail operations.
Key Takeaways
- Amazon reported earnings per share of $1.59, surpassing the expected $1.36.
- Revenue reached $155.67 billion, slightly above the anticipated $155.04 billion.
- Amazon Web Services (AWS) revenue grew 17%, missing expectations of $29.42 billion.
- The company anticipates second-quarter operating income between $13 billion and $17.5 billion, below the $17.64 billion consensus.
- Tariff concerns are impacting pricing strategies for third-party sellers on Amazon's platform.
Earnings Overview
In its earnings report, Amazon revealed a net income of $17.13 billion, or $1.59 per share, compared to $10.43 billion, or 98 cents per share, from the previous year. The company’s revenue growth was driven by its retail and advertising segments, with advertising sales rising 19% year-over-year to $13.92 billion.
However, the performance of AWS, which is crucial for Amazon's overall profitability, raised eyebrows. The cloud division's revenue growth slowed for the third consecutive quarter, coming in at $29.27 billion, below analyst expectations. This decline in growth rate has led to concerns about the sustainability of AWS's market dominance.
Tariff Concerns Impacting Guidance
Amazon's management highlighted that ongoing tariff and trade policy uncertainties are influencing their business outlook. The company noted that it sources many products from China, which has been significantly affected by recent tariffs imposed by the U.S. government. This has led to increased costs for third-party sellers, many of whom are already raising prices or cutting back on advertising to cope with higher import expenses.
CEO Andy Jassy expressed optimism about navigating these challenges, stating that the diversity of Amazon's seller base might mitigate the impact of tariffs. He emphasized that some sellers may not pass on the full cost of tariffs to consumers, potentially allowing Amazon to maintain competitive pricing.
Market Reactions and Future Outlook
The mixed earnings report and cautious guidance have led to a decline in Amazon's stock price, reflecting investor concerns about the broader economic environment. Analysts are closely monitoring how the ongoing tariff situation will affect consumer spending and Amazon's profitability in the coming quarters.
Despite the challenges, Jassy remains hopeful that Amazon can emerge stronger from this uncertain landscape, similar to how it capitalized on increased online shopping during the COVID-19 pandemic.
As the situation evolves, investors will be watching for any changes in consumer behavior and how Amazon adapts its strategies in response to the ongoing economic pressures.
Sources
- Amazon (AMZN) Q1 earnings report 2025, CNBC.
- AWS Q1 earnings report 2025, CNBC.
- Amazon (AMZN) Projects Profit That Misses Estimates on Trade Concerns, Bloomberg.com.
- Amazon, Apple Earnings Show Trump Tariffs Are Coming for Big Tech, Too, Bloomberg.
- Apple and Amazon beat expectations, but look deeper, CNBC.