Amazon Q2 Earnings Beat Estimates but AWS Margins Disappoint Investors

Amazon.com (NASDAQ: AMZN) reported second-quarter earnings that exceeded Wall Street expectations, driven by strong e-commerce and advertising growth, but shares dipped in after-hours trading as cloud margins fell short of forecasts.

The tech giant posted earnings per share of $1.68, topping analyst projections of $1.32. Revenue climbed 11% year-over-year to $167.7 billion, surpassing expectations of $162.05 billion.

Amazon Web Services (AWS), the company’s key cloud computing division, generated $30.9 billion in sales, up 17.5% from a year earlier and slightly above consensus estimates. However, AWS operating margins came in at 32.9%, missing market expectations and fueling concerns over potential market share erosion.

Free cash flow was nearly flat, missing forecasts of $8.2 billion due to heavy capital expenditures, much of which is being funneled into artificial intelligence initiatives. CEO Andy Jassy highlighted ongoing AI-driven projects, including Alexa+, DeepFleet, and Bedrock AgentCore, noting that these innovations are improving customer experience and operational efficiency.

For the third quarter, Amazon forecasts revenue between $174 billion and $179.5 billion, implying annual growth of 10% to 13%, aided by a 130 basis-point foreign exchange tailwind. Operating income is projected at $15.5 billion to $20.5 billion, compared to $17.4 billion in the same period last year.

Analysts at Vital Knowledge described the results as “not bad” but less impressive than those of peers Meta Platforms and Microsoft, highlighting ongoing scrutiny of AWS performance amid intensifying competition in cloud and AI markets.

The earnings report underscores Amazon’s dual focus on expanding e-commerce dominance and aggressively investing in AI to secure future growth.