Amazon shares dropped 7% in after-hours trading despite beating Q2 estimates. The e-commerce and cloud giant reported $1.68 EPS versus $1.33 expected and $167.7 billion revenue versus $162.09 billion forecast.
Amazon Web Services pulled in $30.87 billion, just edging past the $30.8 billion consensus. Advertising revenue jumped 23% to $15.7 billion, also above estimates.
CEO Andy Jassy pushed back against cloud competition concerns, calling AWS’s lead “pretty significant” and expressing optimism about its AI progress. 
But guidance hit a nerve. Amazon forecast Q3 operating income between $15.5 billion and $20.5 billion — below the $19.48 billion analysts wanted. That spooked investors amid Amazon’s plan to pour up to $100 billion into AI this year.
Andy Jassy stated:
“Our AI progress across the board continues to improve our customer experiences, speed of innovation, operational efficiency, and business growth, and I’m excited for what lies ahead.”
Q3 revenue is expected between $174 billion and $179.5 billion, beating analyst calls for $173.1 billion. AWS grew 18% YoY, trailing Microsoft Azure’s 39% and Google Cloud’s 32% growth.
Amazon’s retail sales also held strong: online stores revenue rose 11% to $61.5 billion, seller services up 11% to $40.3 billion.
Trade tensions and potential tariffs remain on watch. Jassy said costs haven’t pushed prices higher yet but promised Amazon will absorb any increases.
Amazon’s ad business is now the third-largest digital ad platform, after Meta and Google, showing powerful growth and profit potential.
This earnings report highlights Amazon’s AI bet amidst rising cloud rivals and cautious investor expectations.
