Amazon exceeds expectations again, but AWS growth rate raises investor concerns

For the second consecutive quarter, Amazon’s AWS growth has lagged behind key competitors, leaving investors cautious about buying the company’s shares

Amazon.com, Inc. (NASDAQ: AMZN) posted strong results for Q2 2025, reporting net revenue of 167.70 USD billion (+13% year-on-year) and earnings per share of 1.68 USD, both exceeding analysts’ expectations. Key segments delivered sustained growth: AWS revenue rose by 17.5% to 30.9 USD billion, advertising revenue increased by 22% to 15.7 USD billion, and operating profit in the international division tripled – underscoring the company’s strength in cloud services, advertising, and global retail. The company also unveiled significant AI-driven innovations, introducing new generative shopping tools that further integrate artificial intelligence into commerce and operations.

However, AWS’s operating margin fell to 32.9%, while free cash flow declined due to substantial capital investment in AI infrastructure and data centres.

Despite the strong revenue and profit figures, a cautious Q3 earnings forecast and slower AWS growth compared to rivals disappointed investors. As a result, Amazon shares fell by around 8% in after-hours trading following the release of the report.

This article examines Amazon.com, Inc., providing a fundamental analysis of Amazon’s (AMZN) quarterly results and a technical analysis of Amazon.com shares, forming the basis for the 2025 AMZN share price forecast. It also outlines the company’s business model, assesses the risks of investing in Amazon.com, and presents expert forecasts for Amazon’s stock.

About Amazon.com, Inc.

Amazon.com, Inc. is one of the world’s largest technology companies. It was established by Jeffrey Bezos in 1994 in Seattle, US. Initially, the company specialised in selling books online but has since evolved into a multi-industry platform. Today, Amazon is engaged in e-commerce, provides cloud computing services through Amazon Web Services (AWS), manufactures electronics (such as Kindle and Echo), and develops media services, including streaming and content production.

The company held its IPO on 15 May 1997, listing its shares on the NASDAQ under the ticker AMZN.

Amazon.com, Inc.’s main financial flows

Amazon’s revenue is based on several key segments, reflecting the company’s varied, multisectoral operations:

• Online retail: selling goods directly on behalf of the company, including books, electronics, clothing, household appliances, and more
• Marketplace: providing the company’s platform to third-party sellers to sell their goods through its website. Amazon generates revenue from sales commissions, paid storage and delivery services and other seller support services
• Cloud computing (Amazon Web Services): this is the world’s largest cloud service provider. The service includes server rentals, data storage, big data analytics tools, and other cloud solutions. This segment generates Amazon’s highest profits compared to all other business areas
• Subscriptions (Amazon Prime and other services): providing access to streaming platforms (video and music), cloud storage, and other products. This category also includes revenue from subscriptions to other services, such as Kindle Unlimited and Amazon Music Unlimited
• Advertising: actively developing its digital advertising business, including income from placing advertisements on the platform, such as ads in search results. Revenue from these and other advertising services has increased significantly in recent years
• Offline retail stores: physical sales outlets, including Amazon Go and Amazon Fresh stores, Whole Foods Market supermarkets, and speciality book and electronics stores
• Electronics and technology sales: producing and selling its own products, including the popular Kindle eBooks, Echo smart speakers with Alexa voice assistant, Fire TV streaming boxes, and other technology products
• Other areas: less significant revenue streams, such as providing logistics services to third parties, acting as an intermediary in book publishing (Amazon Publishing), developing video games (Amazon Game Studios), income from the Twitch streaming platform, and other innovative projects

These diverse revenue streams enable Amazon.com, Inc. to remain resilient to changing market conditions and expand its influence across various sectors.

Amazon.com, Inc. Q3 2024 report

Amazon reported it ended Q3 2024 with gains across key financial indicators. Below is the main report data:

• Revenue: 158.9 billion USD (+11%)
• Net income: 15.3 billion USD (+54%)
• Earnings per share: 1.43 USD (+52%)
• Operating profit: 17.5 billion USD (+55%)

Revenue by segment:

• North America: 95.5 billion USD (+8%)
• Operating income (loss): 5.7 billion USD (+30%)
• International: 35.9 billion USD (+11%)
• Operating income (loss): 1.3 billion USD – in Q3 2023, the company posted a loss of 95 million USD
• Amazon Web Services (AWS): 27.4 billion USD (+19%)
• Operating income (loss): 10.4 billion USD (+49%)

All key financial metrics showed growth in Q3 2024. The international segment saw increased sales, but costs also rose concurrently. As a result, it remained the most vulnerable and could be the first to incur losses in the event of even minor economic disruptions.

The North American segment contributed the most to the company’s total revenue but also incurred the highest costs.

AWS remained Amazon’s most promising and profitable division, demonstrating sustained growth and strong profitability.

For Q4 2024, Amazon forecasts revenue between 181.0 and 188.0 billion USD, representing a 7-11% increase compared to the corresponding period in 2023. Operating profit is expected to range between 16.0 and 20.0 billion USD, up from 13.0 billion USD a year earlier.

Amazon.com, Inc. Q4 2024 report

Amazon reported ending Q4 2024 with growth in key financial metrics once again. The key figures from the report are as follows:

• Revenue: 187.8 billion USD (+10%)
• Net income: 20.0 billion USD (+88%)
• Earnings per share: 1.86 USD (+86%)
• Operating profit: 21.2 billion USD (+60%)

Revenue by segment:

• North America: 115.5 billion USD (+9%)
• Operating income (loss): 9.6 billion USD (+43%)
• International: 43.4 billion USD (+8%)
• Operating income (loss): 1.3 billion USD - In Q4 2023, the company posted a loss of 419 million USD
• Amazon Web Services (AWS): 28.8 billion USD (+19%)
• Operating income (loss): 10.6 billion USD (+48%)

In its commentary on the Q4 2024 report, Amazon’s management provided forecasts for 2025, focusing on revenue, operating profit, and capital expenditures. For Q1 2025, revenue is expected to range between 151.0 and 155.5 billion USD, below the consensus forecast of 158.6 billion USD. Operating profit for this period is projected at 16.0 billion USD, which also falls short of analysts’ expectations.

The company also announced a significant increase in capital expenditures, which could reach 105.0 billion USD in 2025. This marks a notable rise compared to 77.0 billion USD in 2024 and more than double the 48.0 billion USD spent in 2023. These investments will primarily focus on infrastructure, including the expansion of the AWS cloud business and the development of AI solutions.

AWS is anticipated to remain Amazon’s key growth driver in 2025 due to a trend of companies migrating to cloud infrastructure, the end of the cost optimisation phase, and increasing demand for AI solutions. The company has described artificial intelligence as a once-in-a-lifetime opportunity.

The data indicates that Amazon is heavily investing in developing AWS and AI, with substantial investment in infrastructure. However, the weaker-than-expected revenue and operating income forecast for Q1 2025 has disappointed investors, negatively impacting the share price.

Amazon.com, Inc. Q1 2025 report

On 1 May, Amazon.com released its report for Q1 2025, ending 31 March. Below are the key indicators compared to the same period in 2024:

• Revenue: 155.66 billion USD (+9%)
• Net income: 17.12 billion USD (+64%)
• Earnings per share: 1.59 USD (+62%)
• Operating profit: 18.40 billion USD (+22%)

Revenue by segment:

• North America: 92.89 billion USD (+8%)
• Operating income: 5.84 billion USD (+17%)
• International: 33.51 billion USD (+5%)
• Operating income: 1.01 billion USD (+12%)
• Amazon Web Services (AWS): 29.26 billion USD (+17%)
• Operating income: 11.54 billion USD (+22%)

Amazon.com, Inc.’s Q1 2025 earnings report demonstrated solid results, which may attract investors seeking companies with sustainable growth and operational efficiency.

Net sales rose 9% year-on-year despite an adverse currency exchange effect of 1.4 billion USD. This growth was driven by an 8% rise in North American sales and a 5% increase internationally, confirming Amazon’s ability to strengthen its global market position amid economic uncertainty.

A major achievement for the company was the 64% increase in profit and 22% rise in operating profit, reflecting cost optimisation and improved logistics.

Amazon Web Services (AWS), the company’s key profit driver, recorded a 17% increase in sales, reaching an annualised revenue of 117 billion USD. However, it slightly underperformed expectations due to reduced corporate spending amid concerns about tariffs and a potential recession. By comparison, Microsoft Azure, within the Intelligent Cloud segment, grew by 21%, while Google Cloud recorded an even more impressive 28% increase. While AWS maintained its market share leadership (29% in Q1 2025 compared to Microsoft’s 22% and Google’s 10%), it lagged behind its competitors in growth rates, likely due to a higher comparison base and a temporary slowdown in corporate investment in cloud technologies.

Amazon’s online advertising segment grew by 19%, generating 13.92 billion USD, further solidifying its position as the company’s third-largest revenue stream.

However, not everything was positive. The company recorded a 1 billion USD write-down due to product returns and inventory adjustments linked to tariffs. This included 800 million USD in losses from North American retail and 200 million USD in international markets.

AMZN shares fell following the earnings release. The decline was attributed to slower AWS growth and a conservative Q2 2025 forecast, with operating profit expected in the range between 13.0 and 17.5 billion USD, below the consensus estimate of 17.8 billion USD. Management’s caution was linked to tariff policies, particularly the potential 145% duties on Chinese goods, which could affect half of Amazon’s product range. Nevertheless, the forecast appears understated, which could allow the company to exceed expectations if consumer demand remains steady and AWS growth recovers.

While risks remain, including tariff pressures and increased competition in the cloud segment, where Microsoft and Google are accelerating growth. However, Amazon’s competitive advantages in logistics, customer loyalty, and innovation remain significant.

Amazon.com, Inc. Q2 2025 financial report

On 31 July, Amazon.com released its report for Q2 2025, which ended on 30 June. Below are the key metrics compared with the same period in 2024:

• Revenue: 167.70 USD billion (+13%)
• Net income: 18.16 USD billion (+34%)
• Earnings per share: 1.68 USD (+33%)
• Operating profit: 19.17 USD billion (+30%)

Revenue by segment:

• North America: 100.07 USD billion (+11%)
• Operating income: 7.51 USD billion (+48%)
• International: 36.76 USD billion (+16%)
• Operating income: 1.49 USD billion (+345%)
• Amazon Web Services (AWS): 30.87 USD billion (+17%)
• Operating income: 10.16 USD billion (+9%)

Amazon ended Q2 2025 ahead of expectations on both revenue and profit while maintaining high operational efficiency. Revenue rose by 13% to 167.7 USD billion, operating profit reached 19.2 USD billion, and net income came in at 18.2 USD billion, or 1.68 USD per share. The segments showed varied dynamics: AWS added 17.5%, North America grew by 11%, and the international business grew by 16%. Advertising was a key growth driver, with revenue of 15.7 USD billion and an increase of 23%, supporting monetisation across platforms from the marketplace to Prime Video.

In H2, the company expects Q3 2025 revenue in the range of 174–179.5 USD billion and operating profit of 15.5–20.5 USD billion – guidance that investors viewed as cautious given high expectations for AI and cloud growth.

For the second consecutive quarter, AWS’s growth rate lagged behind competitors. In Q2, Amazon’s AWS revenue grew by 17% year-on-year, but this was notably slower than Microsoft Azure (+39%) and Google Cloud (+32%). The main reason is that AI-related workloads are distributed unevenly: Azure’s growth is driven by integrations with OpenAI and a wave of AI-related demand, while Google Cloud benefits from major contracts and AI data usage.

AWS primarily serves mature corporate clients with traditional cloud services, resulting in steady but less striking growth compared to rivals offering a broader range of new AI use cases.

In summary, the slower growth rate does not mean AWS is losing ground. Amazon is currently building AI infrastructure and gradually increasing capacity. Key factors to watch in the coming quarters include an acceleration in AWS revenue, successful monetisation of new AI tools such as Bedrock and Agent, and a recovery in margins.

Fundamental Analysis of Amazon.com, Inc.

Following the release of Amazon’s Q2 2025 report, several key issues can be highlighted from the analysis. Below are the main points:

• AWS margin compression: AWS revenue grew 17% year-on-year, but the segment’s operating margin fell to 33% (from 39% in Q1) due to higher AI and data centre expenses. Operating profit for AWS increased significantly more slowly than sales. This is important, as AWS constitutes a substantial portion of the company’s operating profit
• Decline in free cash flow due to rising expenditure: free cash flow over the trailing twelve months (TTM) fell to 18.2 USD billion (from 53.0 USD billion a year earlier) amid a rise in capital expenditures to 102.9 USD billion TTM (+87% y/y). Management attributes this primarily to investments in AWS technology infrastructure and capacity expansion
• Pricing pressure in AWS: part of AWS’s growth was offset by price adjustments on long-term contracts, reducing revenue yield
• Currency and geographic factors: exchange rate fluctuations added around 1.5 USD billion to total revenue y/y, but by segment, reduced North American sales by 169 USD million and increased international revenue by 1.7 USD billion
• Sustained high investment in video/content: capitalised video and music on the balance sheet reached 20.4 USD billion, with Q2 spending at 5.1 USD billion, increasing investment costs. Prepayments also include deposits for satellite launches (Kuiper), which will be expensed under Technology and Infrastructure after deployment

Positive factors that could improve Amazon’s financial position include:

• Retail ecosystem: online sales rose 11% y/y to 61.49 USD billion, while services for third-party sellers increased to 40.35 USD billion (+11% y/y), supported by the expansion of same-day and next-day delivery
• Advertising growth: revenue from advertising services grew 23% y/y to 15.69 USD billion, further boosted by ads on Prime Video and a new integration with Roku, reaching around 80 million US households, supporting monetisation
• AWS growth: new offerings (e.g., Kiro Agentic IDE, Bedrock AgentCore, S3 Vectors, NVIDIA Grace Blackwell instances) and major client contracts (PepsiCo, Airbnb, LSEG, SAP, WBD Sports, SK Telecom, NatWest) are expected to drive service utilisation as AI workloads scale
• Logistics and robotics efficiency gains: internal AI solutions, such as DeepFleet (improving robot route efficiency by 10%) and demand forecasting, reduce costs and accelerate delivery, supporting retail margins over time
• Media and sports as advertising engagement drivers: the expansion of sports content on Prime Video (e.g., the announced NBA commentary team, and a strong NASCAR audience) increases the availability of premium advertising inventory

Conclusion: Amazon remains a business with strong growth and profitability, but it is consciously shifting its profile towards investment for scale. The company is rapidly investing in AI, data centres, logistics, and content, temporarily reducing free cash flow and compressing AWS margins. In return, Amazon is building greater capacity for future cloud workloads and a strong second high-margin engine – advertising – while retail continues to accelerate with faster delivery.

If the returns on these capital investments are realised, FCF should normalise at a higher level, and the competitive advantage will strengthen. Key risks include a prolonged period of high expenditures, elevated energy costs, potential price concessions to large clients, and regulatory risks. Overall, this suggests that Amazon is sacrificing some short-term cash to secure long-term leadership and unlock the next wave of monetisation from AI, advertising, and premium content.

Expert forecasts for Amazon.com shares for 2025

• Barchart: 47 of 54 analysts rated Amazon shares as Strong Buy, 6 as Moderate Buy, and 1 as Hold. The upper price target is 305 USD, the lower 230 USD
• MarketBeat: 48 of 49 analysts gave a Buy rating, and 1 gave a Hold. The upper price target is 305 USD, the lower 195 USD
• TipRanks: 44 of 45 professionals advised Buy, and 1 recommended Hold. The upper price target is 300 USD, the lower 240 USD
• Stock Analysis: 23 of 45 experts rated the shares as Strong Buy, 22 as Buy, and 1 as Hold. The upper price target is 305 USD, the lower 195 USD

None of the experts recommend selling AMZN shares.

Amazon.com, Inc. stock price forecast for 2025

Following the release of the Q1 2025 report, AMZN shares broke through resistance at 200 USD, tested it from above, and continued to climb, reaching a local high of 236 USD. The Q2 2025 report was viewed negatively by investors, resulting in a gap down from 234 to 217 USD. However, overall, the company delivered strong results and continued investing in the future, which is currently pressuring business margins. As a result, AMZN share prices have begun gradually recovering and closing the gap. Based on the prevailing performance of Amazon.com shares, the potential price trajectories for 2025 are as follows:

The base case forecast for AMZN stock anticipates further growth to the resistance line near 250 USD. Supporting this scenario are positive market sentiment and the company’s strong results, despite the temporary compression of AWS margins.

The alternative forecast for AMZN shares envisages a retest of support at 200 USD, followed by a rebound and a subsequent rise towards the resistance line at 260 USD.

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