Cloud and ad revenue drive quarterly beat, but light guidance and tariff concerns drag stock lower
Amazon (AMZN) reported better-than-expected earnings and revenue for the first quarter of 2025, fueled by strength in its cloud computing and advertising divisions. However, the company issued a cautious outlook for the current quarter, citing uncertainty related to tariffs and trade policy, which sent shares down more than 4% in after-hours trading.
The tech giant posted earnings of $1.59 per share, beating analyst expectations of $1.36. Revenue reached $155.67 billion, also ahead of the $155.04 billion consensus estimate. Net income surged to $17.13 billion, up from $10.43 billion a year ago.
Amazon’s high-margin advertising business stood out, generating $13.92 billion in revenue—up 19% year over year and above expectations. Meanwhile, Amazon Web Services (AWS), the company’s cloud division, brought in $29.3 billion, just shy of analyst forecasts and reflecting a slower 17% growth rate compared to 18.9% in the previous quarter.
Despite the strong Q1 showing, Amazon issued softer-than-expected guidance for Q2. The company forecasted operating income between $13 billion and $17.5 billion, while analysts had anticipated $17.8 billion. It also projected revenue between $159 billion and $164 billion, reflecting 7% to 11% growth—slightly under the $160.9 billion Wall Street average.
In a notable shift, Amazon flagged “tariffs and trade policies” as potential headwinds in its forward-looking commentary, a concern it had not mentioned in the prior quarter. The warning comes as tariffs, particularly those imposed by the Trump administration on Chinese imports, weigh heavily on the retail giant’s supply chain.
Many of Amazon’s third-party marketplace sellers, who make up over half of the platform’s sales, source products from China. These sellers are facing steeper import costs, with some already raising prices and scaling back ad spending in response to a 145% levy on certain goods.
While Amazon’s ad business remains a bright spot and overall performance outpaced expectations, the combination of geopolitical uncertainty, slowing cloud momentum, and light guidance has raised investor concerns about the near-term outlook.
As tariff discussions intensify and trade tensions remain unresolved, Amazon’s exposure through its vast retail ecosystem is likely to stay in focus heading into the second half of 2025.
You might like this article:Meta Delivers Strong Q1 Results as AI Push Accelerates, but EU Regulation Looms
