Amazon’s second-quarter results beat lofty expectations: revenue rose 13 % y/y to USD 167.7 bn and diluted EPS reached USD 1.68, far above consensus. Yet the shares slipped about 3 % in after-hours trading as investors focused on a softer-than-expected operating-income forecast and a shrinking AWS margin.
Key metrics:
- Revenue: USD 167.7 bn (+13 % y/y) | Operating margin: 11.4 %
- AWS revenue: USD 30.9 bn (+17.5 %) | AWS operating margin: 32.9 %
- North America sales: USD 100.1 bn (+11 %) | International: USD 36.8 bn (+16 %)
- Advertising revenue: USD 15.7 bn (+23 %)
- EPS: USD 1.68 vs USD 1.26 a year ago (+33 %) | Net income: USD 18.2 bn (+35 %)
- Operating income: USD 19.2 bn (+31 %) | TTM operating cash flow: USD 121.1 bn (+12 %)
- TTM free cash flow: USD 18.2 bn (–66 %) — higher AI and logistics capex
AWS segment concerns?
AWS operating margin fell to 32.9 % in Q2 2025, down 660 bp from Q1 2025 (39.5 %) and 260 bp from a year earlier (35.5 %). Management blamed a “front-loaded” wave of investments to meet generative-AI demand. Last quarter AWS launched new Blackwell GPU instances, Bedrock foundation models and agent-based developer tools such as Kiro and AgentCore. Amazon also announced multibillion-dollar data-centre expansions in North Carolina, Pennsylvania and Australia, driving higher depreciation, energy and staffing costs before full revenue kicks in.
Amazon reiterated that utilisation and pricing mix should improve in H2 2025.
Management commentary
CEO Andy Jassy wrote that “AI will change every customer experience,” citing rapid adoption of Alexa+, agent-style developer tools like Kiro and their Bedrock/AgentCore integrations. Management also pointed to record savings on Prime Day, the accelerated roll-out of same- and next-day delivery, and a string of large AWS deals (PepsiCo, Airbnb, Nissan, SAP). The tone remained upbeat: heavy AI and logistics investment is already speeding innovation and boosting operational efficiency.
Outlook
For Q3 Amazon guides for net sales of USD 174–179.5 bn (+10–13 % y/y) and operating income of USD 15.5–20.5 bn. The midpoint is slightly below Wall Street’s 19.5 bn expectation but still above last year’s 17.4 bn. The company assumes a 130 bp FX tail-wind and continued AI-infrastructure capex, while flagging tariffs and macro uncertainty as risk factors.
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