Amazon Shares Fall After Strong Q2 on Weak Q3 Cloud Outlook

Amazon reported strong second-quarter 2025 financial results with revenue rising 13% year-over-year to $167.7 billion and earnings per share of $1.68, surpassing analyst expectations. Amazon Web Services (AWS) remained the key profit driver, generating $30.9 billion in revenue with a 17.5% growth rate, though this growth lagged behind competitors Microsoft Azure and Google Cloud, which posted 39% and 32% gains respectively. AWS profit margins declined to 32.9%, the lowest since late 2023, reflecting heavy investment in AI infrastructure, with Amazon planning to spend up to $100 billion on AI capacity expansion in 2025. Despite the strong revenue performance, Amazon's cautious guidance for third-quarter operating income between $15.5 billion and $20.5 billion fell short of analyst estimates, causing shares to drop over 7% in after-hours trading. CEO Andy Jassy emphasized Amazon's leadership in cloud computing and optimism around AI initiatives, but investor concerns persist over increasing AI expenditure and mounting competition in the cloud space. Analysts hold mixed views, with some projecting upside potential in Amazon shares while others highlight valuation risks amid margin pressures and competitive challenges.