Amazon's down 4% in the after-hours on lucklustre guidance 📉

Amazon (AMZN.US) is down 4% in after-hours trading despite beating estimates for Q1 2025 earnings. Investors are mostly concerned by the downbeat guidance for the second quarter, underlined by the “inherent unpredictability” and risks coming from tariffs, foreign exchange rate fluctuations and global consumer sentiment.

“We’re pleased with the start to 2025, especially our pace of innovation and progress in continuing to improve customer experiences,” states Amazon’s CEO Andy Jassy, as net sales rose 9% to $155.7 bn, exceeding both provided guidance and analysts’ estimate. 

He highlighted advancements like Alexa+, which is smarter and more capable, record-breaking Prime delivery speeds, new Trainium2 chips and Bedrock model expansion in AWS for more efficient AI training, and the successful launch of Project Kuiper satellites. These developments reflect Amazon’s commitment to making customers’ lives easier and expanding global access to broadband internet.

Q1 2025 results:

• Net sales: $155.7 billion (+9% YoY, estimate $155.16 billion)

• Operating income: $18.4 billion (+20% YoY, compared to $15.3 billion in Q1 2024)

  • North America segment operating income: $5.8 billion (+16% YoY, compared to $5.0 billion in Q1 2024)

  • International segment operating income: $1.0 billion (+11% YoY, compared to $0.9 billion in Q1 2024)

  • AWS segment operating income: $11.5 billion (+22% YoY, compared to $9.4 billion in Q1 2024)

• Operating margin: 11.8 % (previously: 11.3%, estimate 11.2%)

• EPS: $1.86 (estimate: $1.48)

Despite consistent growth, future earnings are subject to a high uncertainty. Source: XTB Research.

However, the overall solid results got overshadowed by the weaker-than-expected Q2 2025 guidance. Amazon's projecting operating income of $13–$17.5 billion, below analysts’ $17.8 billion estimate. Sales guidance of $159–$164 billion also fell short of expectations, raising investor concerns. 

The outlook reflects growing worries about the impact of tariffs and trade tensions, which may dampen consumer spending and strain Amazon’s supply chain—especially goods sourced from China. Although AWS met expectations, its growth slowed, and investors remain cautious about high capital spending on AI and data centers without clear near-term returns. Shares dropped 2% following the report, extending a 13% decline year-to-date.

Nevertheless, tech giant’s newest earnings report is a testament to the major shift of attention from AI and cloud computing metrics, previously main talking points and volatility drivers, to the tumultuous U.S. trade policy and worries about the demand for goods provided by the platform.

Following the report, Amazon’s stock erased today’s boost in the after-hours trading. Source: xStation5