Amazon.com, Inc. engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally.
Amazon.com has delivered a stronger-than-expected March quarter, with solid growth across all its key business segments—retail, cloud computing, and advertising. However, despite the upbeat results, the company’s softer guidance for the second quarter unsettled investors, sending shares down nearly 4% in after-hours trading. For investors, the results show a company still firing on many cylinders, but bracing for headwinds as economic uncertainty and potential tariffs loom large.
First-quarter sales climbed 8.6% to USD 155.7 billion, slightly ahead of expectations. The business generated USD 18.4 billion in operating income—up 20% year-on-year—driving an 11.8% operating margin, a notable improvement over last year’s 10.7%. Profits were strong across the board, especially in Amazon Web Services (AWS), which posted an impressive 39.5% margin despite slower top-line growth of 17%. While this was in line with forecasts, it marked AWS’s slowest growth rate in over a year and lagged behind Microsoft’s faster-growing Azure.
Retail performance was steady, with online store sales growing 5% to USD 57.4 billion and physical stores up 6.4%. Advertising remains a bright spot, up 18% to USD 13.9 billion, supported by strong demand from brands looking to capitalise on Amazon’s reach. Subscription services such as Prime also grew by over 9%, suggesting loyalty remains high even as consumers tighten their belts.
Still, not all segments hit their targets. Third-party seller services revenue came in slightly below expectations, and growth in Amazon’s international markets was modest at just under 5%. More notably, the company’s guidance for Q2 operating income—between USD 13 billion and USD 17.5 billion—missed Wall Street’s average estimate of USD 17.8 billion. This signals rising concern about the impact of tariffs, slowing demand, and broader economic pressures.
Management confirmed that trade uncertainty was now factored into their outlook, highlighting potential risks to consumer spending and supply chain costs. CEO Andy Jassy noted that some shoppers may be bringing forward purchases to avoid price increases, while CFO Brian Olsavsky emphasised efforts to protect customer experience and keep prices competitive despite rising costs.
Looking further ahead, Amazon’s long-term growth drivers remain intact. The company continues to expand in key verticals like cloud infrastructure, advertising, and even healthcare, with forays into pharmacy and grocery gaining momentum. However, higher fulfilment expenses, growing capital spend on AI infrastructure, and global trade risks may cap near-term margin expansion.
For investors, Amazon remains a dominant force with diversified revenue streams and unmatched scale. But in the months ahead, success will hinge on managing costs, navigating trade policy, and keeping consumers engaged in an increasingly price-sensitive environment.
