Amazon’s second-quarter net sales rose 12%, ignoring currency moves, to $167.7bn. Growth was broad-based across all divisions, with AWS growing at the fastest pace, up 17.5%.
Operating profit grew 31% to $19.2 billion ($16.8bn expected), driven largely by improvements in the ecommerce business.
Free cash flow decreased from $53.1bn to $18.2bn on a trailing 12-month basis due to investment in infrastructure. Net debt, including leases, was $40.8bn at the end of the period.
For the third quarter of 2025, net sales are expected to grow 10-13% to $174.0-$179.5bn. Operating profit for the quarter is expected to be between $15.5-$20.5bn (market consensus: $19.5bn).
The shares fell 7.0% in after-hours trading.
Our view
Amazon’s quarter was strong, don’t let the market reaction fool you. The only area it failed to beat was cloud growth (AWS), and unfortunately that was the place investors were focused on. AWS grew 17.5%, which would have been fine two weeks ago, but expectations were sky high thanks to knockout cloud growth from peers at Microsoft (39%) and Alphabet (32%).
Through AWS, Amazon is 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.
AWS is coming off a larger base, so there should be some leeway on growth relative to peers. But there are also some concerns about weakening margins and its competitive position for AI workloads. That said, it’s still a phenomenal business and we were encouraged to hear backlogs growing 25% over the past quarter. Supply constraints meant a chunk of growth was left on the table (though peers claimed a similar story).
The aggressive 2025 investment guide is key and mirrors sentiments from other mega-cap players. The vast majority of that spend will focus on cloud and AI infrastructure, as well as investment to improve the efficiency of the retail business (robotics/automation).
Amazon has a powerful balance sheet and shed loads of cash coming in, so paying for all this investment isn’t really a worry. The more important question, like others face, is whether margins can remain stable once these costs start to pass through the income statement.
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.
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.
Amazon has the right ingredients to be a leading AI name over the long term. That said, the retail story is perhaps more compelling than the cloud narrative, and we haven’t said that for quite some time. Amazon is under pressure to meaningfully re-accelerate cloud growth, and that adds a bit of near-term risk.
Amazon key facts
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