E-commerce giant Amazon has delivered a stronger-than-expected performance for the first quarter of 2025, reporting gains in both profit and revenue. However, investor sentiment was tempered by a softer forecast for the upcoming quarter, driven largely by the current uncertainties surrounding US trade policies and tariffs.
For the three months ended March 31, the company posted net income of $17.13 billion, or $1.59 per share, marking a 64% increase from the same period last year, when net income stood at $10.43 billion, or 98 cents per share. The company also reported total revenues of $155.67 billion, up 9% from $143.3 billion a year ago, exceeding analysts’ expectations of $155.04 billion, and expects its operating income for the current quarter to range between $13-17.5 billion.
“We’re pleased with the start to 2025, especially our pace of innovation and progress in continuing to improve customer experiences,” Andy Jassy, Amazon CEO, commented on the earnings. “From Alexa+ (our next generation of Alexa that’s meaningfully smarter, more capable, and takes actions for customers), to another delivery speed record for our Prime members, to our new Trainium2 chips and Bedrock model expansion that make it easier for AWS customers to train models and run inference more flexibly and cost-effectively, to our first Project Kuiper satellites successfully launching into low earth orbit in our quest to provide broadband access to hundreds of millions of households in rural areas without it today—we’re continuing to find meaningful ways to make customers’ lives easier and better every day.”
The company’s core retail and advertising operations both posted healthy growth. Advertising revenue rose 19% year-over-year to $13.92 billion, outpacing expectations of $13.74 billion. Amazon Web Services (AWS), the company’s cloud division and a key profit engine, grew by 17% to $29.3 billion. However, this came in just shy of the $29.42 billion anticipated by analysts, marking the third consecutive quarter that AWS fell slightly below revenue expectations. The company continues to invest aggressively in its long-term capabilities, particularly in AI and infrastructure. Capital expenditure reached $25.02 billion for the quarter, up significantly from $14.92 billion in the same period last year. Much of this spending has gone toward expanding AWS’s capabilities and developing custom AI chips like Trainium2, which are central to Amazon’s push into generative AI.
Despite the strong first-quarter results, Amazon’s forward guidance fell short of Wall Street estimates, leading to a more than 2% dip in the company’s stock during after-hours trading. For the second quarter, Amazon expects its revenue to be between $159 billion and $164 billion, marking a growth rate of 7-11%, compared to analysts’ expectations of $160.9 billion.
The backdrop to Amazon’s muted outlook is the reemergence of trade tensions and the threat of new tariffs under US President Donald Trump. Amazon’s business is particularly vulnerable to such changes due to its deep ties with Chinese suppliers. Many third-party sellers on the platform, who now account for over half of Amazon’s total sales, rely on Chinese manufacturing. These suppliers are now contending with tariffs as high as 145% on certain goods, which could increase operational costs and push prices higher for consumers, and thus lead to potential drops in sales volumes. Amazon has attempted to downplay the impact, with Jassy stating that the company’s wide array of third-party sellers allows it to absorb some of the tariff shocks. “Given our really broad selection, low pricing and speedy delivery, we have emerged from these uncertain eras with more relative market segment share than we started and better set up for the future,” he commented on the matter. “I’m optimistic this could happen again.”
