Amazon Posts Strong Q1 Earnings, But Clouds Gather Over Trade Uncertainty

By Kristoff De Turck - reviewed by Aldwin Keppens

Last update: May 2, 2025

Amazon (AMZN | +3.13%) has kicked off 2025 with robust financial results, showcasing continued growth in both revenue and profit. However, despite these gains, looming concerns over U.S. trade policy are casting shadows over the company’s outlook for the rest of the year.

Solid Q1 Performance

In the first quarter of 2025, Amazon reported an operating income of $18.4 billion, up from $15.3 billion in the same quarter last year. Net income surged to $17.1 billion, or $1.59 per share—beating Wall Street estimates of $1.37 per share. Total revenue reached $155.7 billion, a 9% year-over-year increase and slightly above analyst expectations of $155.2 billion.
While the cloud division, Amazon Web Services (AWS), posted a solid 17% year-over-year growth to $29.3 billion, the number slightly missed forecasts. Analysts had expected AWS to bring in $29.45 billion. Notably, AWS still delivered a record operating margin of 39.5%, its highest since 2014.
Advertising revenue also impressed, climbing nearly 20% to $14 billion. Capital expenditures surged to $24.3 billion, driven by aggressive investment in AI infrastructure and data centers. CEO Andy Jassy emphasized the company’s long-term vision: “AI is already bringing in billions, and that figure is doubling each year.”

Strong Guidance—With a Caveat

For Q2 2025, Amazon forecasts revenue between $159 and $164 billion, representing a 7% to 11% increase year-over-year. Operational profit is projected to fall between $13 billion and $17.5 billion. While the sales outlook topped last year's results, the profit guidance slightly disappointed investors. Even the high end of Amazon’s forecast trails the $17.8 billion Wall Street consensus.

Trade Tensions Resurface

One reason for the cautious tone is the escalating trade tension between the U.S. and China. With new tariffs looming - especially under the potential return of Donald Trump - Amazon may face significant cost increases. The company imports nearly 25% of its merchandise from China, and the loss of duty exemptions for packages under $800 could heavily impact margins.

Goldman Sachs analysts estimate that these trade disruptions could shave off $5 to $10 billion from Amazon’s annual operating profit. That would mean a 6% to 12% dent in the $80 billion initially expected by analysts for this fiscal year.

Andy Jassy acknowledged the uncertainty, adding that Amazon has already observed customers stockpiling certain goods in anticipation of future price hikes, but so far, there's been no broad slowdown in sales.

A Future in the Cloud—and Beyond

Despite short-term concerns, Amazon continues to invest in long-term growth areas like artificial intelligence and satellite internet. The company recently launched the first satellites for Project Kuiper, set to rival Elon Musk’s Starlink.

As Jassy noted, “85% of global IT spending is still on traditional servers. With the rise of AI, the shift to cloud infrastructure will only accelerate.” Amazon believes AWS has the potential to become an even larger pillar of its business in the years to come.

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