Amazon’s first-quarter net sales rose 10%, ignoring currency moves, to $155.7bn. Growth was broad-based across all divisions, with AWS growing at the fastest pace, up 17%.
Operating profit grew 20% to $18.4 billion (consensus: $17.5bn), driven by improvements in AWS and the ecommerce business.
Free cash flow decreased from $50.1bn to $25.9bn on a trailing 12-month basis due to investment in infrastructure. Net debt, including leases, was $38.7bn at the end of the period.
For the second quarter of 2025, net sales are expected to grow between 7-11% to $159-$164bn. Operating profit for the quarter is expected to be between $13.0-$17.5bn (consensus: $17.6bn).
The shares fell 3.2% in after-hours trading.
Our view
Amazon shares slipped a bit despite a solid quarter. AWS growth was decent but looked soft next to what peers reported earlier in the week, and the profit outlook felt a touch cautious. Still, markets love to nitpick - this was a strong update and a solid outlook given the backdrop.
The retail business is in much better shape than a few years ago, which helps now that tariff uncertainty has been added to the mix. So far, performance has held up well, with no clear signs of a demand slowdown. We think dominant players are best placed to not only ride out slower growth but also use their scale to gain share.
Longer term, there’s still plenty of room for e-commerce to grow. Management’s confident in expanding margins by scaling facilities and boosting robotics. We like Amazon’s position - but low-cost rivals remain a real threat.
Through AWS, Amazon remains a leader in cloud services. This is Amazon’s most lucrative growth driver, especially with the AI boom. Companies rely on AWS for core IT infrastructure, and with the new wave of AI demand, computing power is the hottest commodity.
Amazon’s Bedrock platform was launched last year and gives access to a range of the best models from the likes of Meta, Mistral and Anthropic, along with tools to help businesses leverage this new technology.
The aggressive 2025 investment guide is key and mirrors sentiments from other mega-cap players. Like Microsoft and Alphabet, Amazon noted leaving cloud growth on the table as it couldn’t ramp up AI compute capacity fast enough. Amazon has a powerful balance sheet and shed loads of cash coming in, so paying for all this investment isn’t really a worry.
We're also supportive of growth in services like Prime, and the group's advertising arm. It's been impressive to see the latter continue its strong progress. Troves of data footprints and millions of customers ready and willing to click buy are a marketer's dream.
With AWS showing its dominance and the retail business looking stronger than it has for some time, we think Amazon looks well placed in the long term. We’re cautiously optimistic that there’s room for positive earnings surprises this year, but the next few quarters are hard to map. Even if tariff uncertainty calms, Amazon’s retail business makes it more exposed than some of the more software-focused tech giants.
Amazon key facts
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