Amazon shares slumped over 7% in after-hours trading Thursday, as robust second-quarter results were overshadowed by the company’s cautious operating income forecast for the coming period.
Despite outperforming Wall Street consensus on earnings and sales, guidance for the third quarter left investors uneasy, particularly amid Amazon’s escalating artificial intelligence expenditure and mounting cloud competition.
For the April-June quarter, the e-commerce giant reported adjusted earnings of $1.68 per share—comfortably above analyst estimates of $1.33. Revenue accelerated 13% from a year earlier to $167.7 billion, topping projections and outpacing last year’s 10% growth rate.
The figures included yet another strong showing from Amazon Web Services, which pulled in $30.87 billion—just ahead of forecasts. Amazon’s advertising unit once again impressed, with sales climbing 23% to $15.7 billion, marking a bright spot amid ongoing competitive pressures from Meta and Alphabet.
Nevertheless, investors recoiled at Amazon’s guidance, which suggested operating income for the current quarter would fall between $15.5 billion and $20.5 billion, while analysts surveyed by StreetAccount anticipated $19.48 billion. Third-quarter revenue is expected in the $174 billion to $179.5 billion range, representing 10% to 13% year-over-year growth.
Speaking on a post-earnings call, CEO Andy Jassy acknowledged the intensifying battle in cloud computing, highlighting Amazon’s “significant” leadership position while touting optimism around AI-driven initiatives. The company has earmarked as much as $100 billion for AI infrastructure through the year—moves that, for now, appear to be testing the patience of equity holders eager for clearer profit trajectories.
AWS sales maintained their lead as the world’s top cloud provider, growing 18% year-over-year, but fell behind the accelerating gains notched by Microsoft Azure and Google Cloud, which recently posted 39% and 32% growth, respectively.
Amazon’s online retail core also showed resilience in the face of ongoing economic headwinds. Segment sales rose 11% to $61.5 billion, exceeding analyst predictions. Seller services revenue, up 11% at $40.3 billion, likewise beat forecasts, reaffirming the robustness of the marketplace ecosystem.
Despite these positives, the cautious outlook rattled investors amid persistent “recessionary fears” and tariff uncertainties flagged by Amazon as potential headwinds for the coming quarters. Still, Jassy sounded a note of confidence on the call, stating that demand trends remain unaffected and that the company would absorb higher costs if necessary.
