Amazon Profits Surge 35% But Forecast Sinks Share Price

Published: Thursday, July 31, 2025 at 10:18 pm

Amazon's Profits Soar, But AI Investments Weigh on Outlook

Amazon's second-quarter earnings report revealed a mixed bag of strong performance and cautious projections, leading to a dip in after-hours trading. The e-commerce giant announced a 35% surge in quarterly profits, reaching $18.2 billion, up from $13.5 billion in the same period last year. This growth was fueled by a 13% increase in net sales, which hit $167.7 billion, exceeding analyst expectations.

A key driver of Amazon's success was its cloud computing division, Amazon Web Services (AWS). AWS saw a 17.5% jump in sales, reaching $30.9 billion, with operating profit rising to $10.2 billion. This strong performance reflects the increasing demand for cloud infrastructure to support artificial intelligence (AI) applications, a trend benefiting major cloud providers.

Chief Executive Andy Jassy highlighted the positive impact of AI investments, citing the expansion of the Alexa+ service and new AI shopping agents. However, despite the positive results, investors expressed concern about the company's significant spending on AI infrastructure and logistics. Free cash flow declined sharply to $18.2 billion, down from $53 billion in the same period last year, as Amazon ramped up capital spending. The company spent $32.2 billion on property and equipment, nearly double the previous year's figure.

For the current quarter, Amazon forecasts net sales between $174.0 billion and $179.5 billion, representing solid growth. However, the operating profit forecast, ranging from $15.5 billion to $20.5 billion, was more cautious than some analysts anticipated. This caution suggests potential challenges from ongoing trade negotiations and intensifying competition in the AI sector.

BNN's Perspective:

Amazon's performance highlights the complex dynamics of the current economic landscape. While the company demonstrates strong revenue growth and profit, the significant investments in AI infrastructure are clearly impacting short-term profitability. This situation underscores the need for companies to balance innovation and financial prudence. The market's reaction suggests a degree of uncertainty regarding the long-term returns on these AI investments, but the overall trend points towards the continued importance of AI in shaping the future of e-commerce and cloud computing.

Keywords: Amazon, earnings, profits, AI, AWS, cloud computing, sales, investments, outlook, financial results, e-commerce, Andy Jassy, Alexa+, trade, tariffs, free cash flow

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