What's happened
Amazon reported strong first-quarter earnings for 2025, with earnings-per-share of $1.59 and revenue of $155.67 billion, surpassing analyst expectations. However, shares fell in after-hours trading amid concerns over consumer spending due to tariffs imposed by the Trump administration. The company's advertising business also showed significant growth.
What's behind the headline?
Key Insights
- Earnings Performance: Amazon's EPS of $1.59 and revenue of $155.67 billion exceeded analyst estimates, indicating resilience in its business model despite external pressures.
- Advertising Growth: The 19% growth in Amazon's advertising revenue highlights its increasing importance in the digital ad space, positioning it as a strong competitor against Meta and Alphabet.
- Tariff Impact: With over 50% of items sold on Amazon subject to tariffs, the company faces potential price increases that could affect consumer purchasing behavior. CEO Andy Jassy noted that while demand remains stable, the impact of tariffs could lead to higher prices in the future.
- AWS Performance: Amazon Web Services (AWS) reported a 16.9% revenue increase, but this was below expectations, raising concerns about its competitive position against Microsoft Azure.
- Market Sentiment: Despite strong earnings, the drop in share price reflects investor anxiety over future consumer spending and the broader economic implications of ongoing trade disputes.
What the papers say
According to Edward Helmore in The Guardian, Amazon's earnings report shows a significant increase in advertising revenue, which grew by 19% in Q1 2025. However, shares fell in after-hours trading due to concerns about consumer spending amid Trump's tariffs. The NY Post highlighted that AWS's revenue growth was the slowest in five quarters, missing expectations, which may indicate a shift in market dynamics as competitors like Microsoft gain ground. The Independent noted that Amazon's challenges are compounded by rising labor costs and competition from international retailers, which could further impact its pricing strategy.
How we got here
Amazon's earnings come amid ongoing trade tensions and tariffs imposed by the Trump administration, particularly affecting products shipped from China. The company has previously reported strong earnings, but concerns about consumer spending have led to stock price fluctuations.
Go deeper
- What are the implications of the tariffs on Amazon?
- How does Amazon's advertising growth compare to competitors?
- What are analysts saying about Amazon's future performance?
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