Stock prices drop for Amazon following their reported quarterly earnings - Amazon's share price decreases following the release of their recent financial report.
In a surprising turn of events, Amazon's stock took a four percent dip in after-hours trading following the release of its Q2 2025 earnings report, despite the company beating Wall Street expectations in terms of revenue and net income.
The tech giant reported a significant increase in net income, surging to $18.2 billion, and a 13% year-over-year growth in revenue, amounting to $167.7 billion. However, the company's forecast for the current quarter falls significantly below analysts' expectations at the lower end. Amazon predicts operating income between $15.5 billion and $20.5 billion, with a midpoint below the average analyst expectation of $19.48 billion.
This discrepancy between Amazon's forecast and analysts' expectations, coupled with the company's plans for substantial investments in artificial intelligence (AI) and data centers, has raised concerns about profitability and margin compression. Amazon plans to invest up to $100 billion in 2025 on AI infrastructure, data centers, and software, a move that could strain cash flow and potentially impact investor returns.
Moreover, Amazon's cloud business, AWS, is facing competitive challenges, with profit margins declining to their lowest level since late 2023. This weighs on confidence in AWS as a core growth engine.
Beyond these factors, broader risks such as tariffs and potential economic headwinds add uncertainty to Amazon's high valuation and growth projections.
Investors reacted negatively to the cautionary forward guidance and high investment spending that may constrain Amazon’s near-term profits, despite the strong quarterly results beating revenue and earnings targets.
Amazon, headquartered in Seattle, is the world's largest online retailer, with its revenue for the last quarter also reported in Euros at €146.7 billion. The growth in Amazon's cloud division AWS was just in line with market expectations at 17.5% last quarter, with the quarterly results not significantly exceeding Wall Street expectations for AWS growth.
[1] CNBC (2025). Amazon stock falls after earnings beat as company outlines heavy investment spending. CNBC. Retrieved from https://www.cnbc.com/2025/07/29/amazon-earnings-q2-2025.html
[2] Reuters (2025). Amazon forecast disappoints, shares fall despite strong Q2 results. Reuters. Retrieved from https://www.reuters.com/article/us-amazon-com-results-q2/amazon-forecast-disappoints-shares-fall-despite-strong-q2-results-idUSKCN21X21J
[3] MarketWatch (2025). Amazon shares fall after earnings beat, as company issues disappointing operating income guidance. MarketWatch. Retrieved from https://www.marketwatch.com/story/amazon-shares-fall-after-earnings-beat-as-company-issues-disappointing-operating-income-guidance-2025-07-29
[4] Bloomberg (2025). Amazon's cloud business pressured by competition, lower margins. Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2025-07-29/amazon-s-cloud-business-pressured-by-competition-lower-margins
Financial aid, in the form of substantial investments, is set to be allocated by Amazon towards artificial intelligence (AI) and data centers, potential areas of growth and technological advancement for the company's business. Despite exceeding Wall Street's revenue and income expectations, these planned investments have raised concerns among investors regarding the company's profitability and margin compression.
In an attempt to foster community aid and address economic headwinds, Amazon is allocating up to $100 billion in 2025, using financial aid to promote growth in AI, data centers, and software, despite potential strains on cash flow and investor returns.
