Amazon receives strong support from analysts ahead of earnings: revenue and profit expected to exceed expectations, AWS growth likely to accelerate

According to Zhitong Finance APP, Amazon (AMZN.US) will announce its Q2 2025 financial report on July 31, Eastern Time. Wall Street analysts expect that driven by the continued growth of Amazon Web Services (AWS) and the expansion of retail and advertising businesses, Amazon's Q2 revenue will reach $162 billion, with an expected earnings per share of $1.32. Key themes that investors will focus on in this latest financial report and management conference call include: artificial intelligence (AI) innovations and AI-driven services from AWS, improvements in logistics efficiency, and the profit margin trends of AWS (increased capital expenditures may impact profitability).

Deutsche Bank analyst Lee Horowitz stated that although tariff issues became a market focus when Amazon provided its Q2 guidance, the strong consumer performance and the continued deferral of tariff-related cost increases may provide upside potential for Q2 and Q3 performance. He noted, "One thing has become very clear: with the absence of Temu and Shein, Amazon's market share growth has accelerated." The bank also expects AWS revenue growth to accelerate in the second half of this year.

Investment bank Needham raised its expectations for Amazon ahead of the Q2 financial report. Analyst Laura Martin also believes that the worst of the tariff impacts is over and mentioned the record sales during Prime Day. She specifically pointed out that generative artificial intelligence (GenAI) is structurally reducing costs in Amazon's logistics system and enhancing its automation efficiency.

Citi continues to maintain a bullish outlook on Amazon. Analyst Ronald Josey and his team expect the e-commerce giant's revenue and operating profit to exceed expectations. The analysts emphasized, "Considering the overall efficiency of the fulfillment center network (FC network) continues to improve, cost control is in place, and the revenue share of high-margin advertising business and AWS is increasing, we expect its profit margins to continue to expand."

Analyst Luca Socci is also very optimistic about Amazon's prospects. He stated, "The core focus of this financial report is neither retail sales (Prime Day performance is outstanding) nor the growth rate of AWS (which is expected to be satisfactory). Investors are beginning to form a new narrative around Amazon's innovation capabilities. We may be witnessing the rise of a new leader in robotics technology and a truly competitive low-earth orbit satellite company. Not to mention its progress in Zoox autonomous taxis (robotaxi) and self-developed AI-supported chips. Amazon will once again prove that its intrinsic driving force is: 'Your profit is my opportunity.' For this reason, it is unafraid to compete alongside Tesla, Microsoft, Google, and NVIDIA. In other words, I expect this financial report will help us further understand Amazon's new businesses that are full of potential and highly rewarding."

However, Lucas Ma from Envision Research issued a warning. He stated, "Amazon's free cash flow has been declining for several consecutive quarters. Unfortunately, I expect this trend to continue in the upcoming Q2 financial report, exacerbated by the intensifying AI infrastructure race and the still high geopolitical uncertainty." This may limit its future capital allocation ability for growth and increase its valuation risk