TLDR:
- Amazon reported Q1 earnings of $1.59 per share, beating estimates of $1.36-$1.37
- Revenue came in at $155.7 billion, above expectations of $155.1-155.2 billion
- AWS revenue was $29.3 billion, slightly below or inline with analyst expectations
- Q2 operating income guidance of $13-17.5 billion fell short of $17.8 billion expectations
- Stock fell after earnings report despite the Q1 beat due to the weaker guidance
Amazon posted strong first-quarter results that exceeded Wall Street expectations, but its stock took a hit after the e-commerce giant issued weaker-than-expected guidance for the second quarter.
The company reported earnings per share of $1.59 for Q1, well above analyst estimates of $1.36-$1.37.
Revenue reached $155.7 billion, beating Wall Street’s expectations of around $155.1 billion.
This represents solid growth compared to the same period last year when Amazon reported EPS of $0.98 and revenue of $143.3 billion.
Amazon Web Services (AWS), the company’s cloud computing division, generated $29.3 billion in revenue. This was either slightly below or in line with analyst expectations, depending on the source.
Despite the strong Q1 performance, Amazon’s stock declined following the earnings announcement.
The main reason for the negative market reaction was the company’s Q2 operating income guidance, which came in below expectations.
Amazon $AMZN, fell over 6% after reporting Q1 2025 earnings…
EPS — Actual: $1.59 | Estimate: $1.37 🟢
Revenue — Actual: $155.7B | Estimate: $155.29B 🟢The drop was due to lighter-than-expected Q2 guidance or was it this trendline?? 😂 pic.twitter.com/hUR9eopGAo
— Trader Edge (@Pro_Trader_Edge) May 2, 2025
Tariff Tensions
Amazon recently found itself in a political controversy over tariffs.
A report by Punchbowl News claimed the company was planning to include the impact of tariffs on product prices.
This reportedly drew criticism from the White House, with Press Secretary Karoline Leavitt calling it “a hostile and political act.”
President Trump allegedly called Jeff Bezos directly to complain about the plan.
Amazon quickly denied the report, stating: “The team that runs our ultra-low cost Amazon Haul store considered the idea of listing import charges on certain products. This was never approved and is not going to happen.”
Trump later commented, “Jeff Bezos is very nice. Terrific. He solved the problem very quickly. He did the right thing. Good guy.”
Q2 Outlook and Market Response
For the second quarter, Amazon forecasted operating income between $13 billion and $17.5 billion.
This range fell short of the $17.8 billion that analysts were expecting.
The company also mentioned it anticipates a 10-basis-point impact to its Q2 sales.
Amazon provided revenue guidance for Q2 ranging from $159 billion to $164 billion.
The midpoint of this range aligns with the consensus estimate of $161.2 billion.
On the earnings call with analysts, CEO Andy Jassy addressed the tariff situation.
He stated that the company hasn’t yet seen any major impact from tariffs on demand or sellers’ pricing decisions.
However, he acknowledged that this could change in the future.
UBS analyst Stephen Ju maintained a Buy rating on Amazon stock but lowered his price target from $272 to $253, citing future risks from tariffs.
Ju estimated that about 50% or more of products sold on Amazon will face some kind of tariff-related price increase.
“Consumers therefore might have to make more difficult choices on where to allocate their dollars,” he wrote in an investor note.
The analyst also pointed out potential “second order impacts” as exporters to the US might face lower revenue, potentially affecting global employment and international growth.
Amazon’s stock dropped over 1% before the bell on Friday, following a 4% decline on Thursday after the earnings report.
The current tariff situation presents a challenge for tech companies like Amazon.
With goods imported from China facing a 145% tariff and other countries subject to a blanket 10% tariff, many products sold online will likely see price increases.
This earnings report shows that while Amazon continues to grow and exceed expectations in many areas, investors are concerned about the company’s near-term outlook and the potential impact of tariffs on its business.
