The tech big has given buyers loads to consider with its latest earnings announcement.
Amazon (AMZN 3.97%) simply reported monetary outcomes for the three-month interval that ended June 30 (second-quarter 2025). Judging by the truth that the share worth was down practically 10% (as of Aug. 4) from the day of the announcement on July 31, the market clearly hasn’t been pleased with the replace that administration supplied.
Income totaled $167.7 billion, with diluted earnings per share coming in at $1.68. These two headline figures had been forward of Wall Avenue’s expectations. It wasn’t even shut. Nevertheless, the management staff’s steerage was for working earnings to be $18 billion (on the midpoint) for the third quarter, properly under analysts’ $19.5 billion forecast.
It is necessary that buyers are maintaining with Amazon’s most up-to-date monetary efficiency. However these items needs to be seen with the larger image in thoughts. Is that this “Magnificent Seven” inventory a wise long-term purchase?
Picture supply: Getty Pictures.
Development is selecting up
Throughout Q2, Amazon’s high line grew at a 13.3% year-over-year fee. This was an acceleration in comparison with the primary quarter, which is clearly an encouraging signal. What’s exceptional is that the enterprise is increasing at a powerful clip, regardless of accumulating an enormous $670 billion in internet gross sales within the final 12 months. Even at its present measurement, development continues to be part of the Amazon story.
The North America section posted an 11% income acquire. This was the quickest growth fee since Q1 2024. The corporate had its largest Prime Day ever. It additionally expanded same-day and next-day supply within the U.S.
Amazon’s digital promoting section deserves some consideration. Income soared 22% to $15.7 billion. That is turning into a extra necessary money-maker for the corporate. Amazon is behind solely Meta Platforms and Alphabet in terms of digital advert gross sales.
Buyers who believed that Amazon’s development engine was slowing acquired a nice shock. Maybe the enterprise nonetheless has a few years left of double-digit income beneficial properties as we glance forward.
Is AWS dropping its luster?
Probably the most thrilling a part of Amazon has nothing to do with on-line buying or digital promoting. As an alternative, it is Amazon Internet Providers (AWS), the cloud computing platform with industry-leading market share, that buyers appear to concentrate on probably the most. The most recent monetary replace may need given shareholders a motive to be cautious.
AWS registered 17.5% year-over-year income development to $30.9 billion. That quantity was barely forward of analyst estimates. Nevertheless, it is price mentioning that the 2 largest rivals, Microsoft Azure and Alphabet’s Google Cloud, are each rising at a lot quicker charges. Which means that AWS is dropping market share.
What’s extra, AWS’ working earnings elevated by simply 9.7%, decrease than the income acquire, as bills crept up. However CEO Andy Jassy stays very assured on the chance AWS has.
“I say this ceaselessly, however do not forget that 85 to 90% of worldwide IT spend continues to be on premises versus within the cloud,” he identified on the Q2 2025 earnings name.
There may even proceed to be strong demand from prospects trying to make use of the increasing set of synthetic intelligence (AI) instruments.
For what it is price, buyers should get comfy with the quantity of spending taking place, as Amazon may undertake nearly $120 billion in capital expenditures simply this 12 months. If the enterprise did not do that, then it might danger falling behind within the AI race.
Purchase the dip
As of Aug. 4, shares of Amazon commerce 13% under their peak from February. I view this dip as a wise shopping for alternative. Buyers have the possibility proper now so as to add one of many world’s high firms to their portfolios at a time when the market is pessimistic in regards to the newest monetary outcomes. Over the long run, this enterprise will stay a dominant tech chief, regardless that the numbers every quarter may differ considerably. I nonetheless assume affected person buyers needs to be rewarded.
Neil Patel has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Idiot recommends the next choices: lengthy January 2026 $395 calls on Microsoft and brief January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure coverage.
