By Samiat May, 02, 2025 Technology

Amazon Beats Q1 Earnings Expectations, But Cautious Q2 Outlook Pressures Stock

Amazon (NASDAQ: AMZN) delivered better-than-expected financial results for the first quarter of 2025, surpassing Wall Street projections on both revenue and profit. However, the e-commerce and cloud giant issued a lighter-than-anticipated outlook for its second-quarter operating income, prompting a decline of over 4% in its stock during after-hours trading.

For Q1 2025, Amazon posted earnings per share of $1.59, topping the $1.36 estimate from analysts surveyed by Bloomberg. Revenue for the quarter came in at $155.7 billion, narrowly exceeding the expected $155.1 billion. This performance marked a significant improvement over the same period last year, when Amazon reported $0.98 EPS and $143.3 billion in revenue.

Amazon Web Services (AWS), a key profit driver for the company, generated $29.3 billion in revenue, in line with expectations. While the cloud business continues to show stability, it wasn’t enough to offset investor concerns over Amazon’s softer guidance for the upcoming quarter.

Q2 Outlook Falls Short of Expectations

Looking ahead to Q2 2025, Amazon said it expects operating income between $13 billion and $17.5 billion, which fell short of the $17.8 billion analysts were forecasting. For comparison, the company reported $14.7 billion in operating income during the same quarter last year.

Additionally, Amazon warned of a potential 10-basis-point impact to second-quarter sales, though the company did not elaborate on the factors driving this headwind.

The conservative forecast caught investors off guard, leading to a sell-off in Amazon shares after the earnings call. The report highlighted growing concerns around margin pressures, consumer spending trends, and ongoing macroeconomic uncertainty.

Tariff Concerns Addressed

Amid speculation about new pricing strategies tied to tariffs, Amazon was quick to set the record straight. A spokesperson clarified that rumors about the company adding import charges to products on its main platform were unfounded.

“The team that runs our ultra-low cost Amazon Haul store considered the idea of listing import charges on certain products,” said Amazon spokesperson Tim Doyle. “This was never approved and is not going to happen.”

The clarification helped ease concerns that Amazon might pass tariff-related costs onto consumers, a move that could have affected its pricing competitiveness.

Bottom Line

Despite a strong start to 2025 and impressive year-over-year growth in earnings and revenue, Amazon’s conservative guidance for Q2 tempered investor enthusiasm. The company’s cloud business remains a stable anchor, but with uncertain consumer dynamics and margin concerns on the horizon, the road ahead looks slightly more cautious.

Tags:

Share On Facebook Twitter Linkedin Whatsapp Telegram