Amazon: A Good Quarter but Some Concerns

Here's our initial take on Amazon's (AMZN 2.97%) financial report. Key Metrics Metric Q1 2024 Q1 2025 Change vs. Expectations Revenue $143.3 billion $155.7 billion 9% Beat Earnings per share $0.98 $1.59 62% Beat AWS revenue $25.0 billion $29.3 billion 0.17 Missed Advertising revenue $11.8 billion $13.9 billion 19% Beat Some Good, Some Not So Good Amazon's stock fell after its last earnings report, and the primary reason was weak guidance for the first quarter. At the time, Amazon was calling for revenue of about $153 billion at the midpoint of its range. Since then, analyst expectations have increased to about $155.1 billion, and the company beat that figure, reporting 9% year-over-year revenue growth to $155.7 billion. On the bottom line, Amazon's $1.59-per-share figure handily beat the consensus. The two most exciting components of Amazon's business, at least from a future growth perspective, are Amazon Web Services (AWS) and advertising, and these were a bit of a mixed bag. AWS grew by 17% year over year but didn't quite meet expectations. And advertising revenue was the fastest-growing part of the company, up 19% year over year and ahead of expectations. Online sales revenue was a little sluggish, up 6% year over year, a slowdown from the 7% growth rate in the same quarter last year. Third-party-seller services revenue slowed considerably, to a 7% growth rate, compared to a 16% growth rate a year ago. In other nonearnings news, Amazon announced the day before it reported that it will spend $4 billion by the end of 2026 to expand its rural delivery capabilities. Investors cheered this news, as faster deliveries generally mean higher order volume. Looking ahead, Amazon expects revenue between $159 billion and $164 billion in the second quarter. This was somewhat lighter than investors had hoped to see. Immediate Market Reaction The initial reaction to Amazon's numbers was modestly negative. As of 4:20 p.m. ET, Amazon stock was down by about 2.5%. The combination of the AWS revenue miss and somewhat light second-quarter guidance seems to be outweighing the top- and bottom-line beats for the first quarter. What to Watch There are significant tensions between Amazon and the Trump administration over tariff concerns, so that will be worth keeping an eye on going forward. There were reports that the retail giant was considering displaying tariff costs on its e-commerce listings, but the company denied it, saying it would not happen. However, this isn't likely to be the last chapter in the tariff story for Amazon, which sells many products that originate from outside the United States. Helpful Resources Full earnings report Investor relations page