Why Amazon Stock Is Plummeting Today
Shares of Amazon (AMZN) are down 8.3% amid broader market declines, following the release of its Q2 financials. Although the company beat earnings and revenue expectations, growth in its cloud business, AWS, lagged behind competitors like Microsoft and Google. Additionally, new tariffs signed by President Trump are impacting Amazon's stock, given its reliance on international trade. Despite these challenges, Amazon remains a highly profitable company with significant growth potential.
Shares of Amazon (AMZN -8.09%) are falling on Friday, down 8.3% as of 3:28 p.m. ET. The move comes as the S&P 500 and Nasdaq Composite have lost 1.7% and 2.3%, respectively.
Amazon released its Q2 financials, which, while beating many of Wall Street's expectations, fell short of lofty targets in a few key areas. News of additional tariffs is also affecting shares.
Amazon's cloud business is growing, but not fast enough for some investors
Amazon's Q2 earnings report revealed the company beat consensus estimates for both earnings per share and revenue. The company delivered $1.68 per share on $167.70 billion in sales, while $1.33 per share on $162.09 billion was expected.
However, investors were paying close attention to growth in the company's data center business, Amazon Web Services (AWS), and how it compares to its competition. The 18% year-over-year growth was much less than that of Microsoft's Azure or Alphabet's Google Cloud, which recorded 39% and 32% growth, respectively. Still, CEO Andy Jassy drove home the point that AWS is still by far the dominant player, saying, "I think the second player is about 65% of the size of AWS."
Image source: Getty Images.
Trump's new tariffs
President Trump signed an executive order updating "reciprocal" tariff rates for many countries, with new rates from 10% to 41%, on the August 1st deadline. Markets appear to have thought another extension would be announced, and stocks are down across the board. Because of Amazon's reliance on international trade, its stock was hit particularly hard.
Despite the tariff news and the somewhat underwhelming Q2 report, Amazon remains an incredibly profitable company with major growth potential.
