Amazon Earnings Updates: Q2 Results to Deliver Updates on AWS, AI

Justin Post, research analyst at Bank of America, believes Amazon’s high-margin cloud computing business will be the key value driver going forward.

Post will be looking for signs of AWS capacity increases that will lead to further AWS revenue growth in the second half of the year. Last quarter, Amazon said AWS growth was held back by chip shortages and energy constraints at its data centers.

Post also expects Amazon’s partnership with Anthropic to contribute significantly to the AWS business as the AI startup runs its training models on Amazon’s infrastructure.

BofA recently raised its price target from $248 to $265, which implies 14% upside from current levels.

Amazon’s Prime Day sales event took place in July after the second quarter ended, so the company might not go into details about the event’s financial performance.

This year’s sale lasted four days, making it Amazon’s longest-ever version of the event. That, plus consumers’ focus on deals as they continue to worry about tariffs, could get Jassy and others to talk a bit about how Prime Day went this year.

Brent Thill, senior technology research analyst at Jefferies, said that tariff impacts and price increases have largely not materialized. Consumer demand has remained resilient, and inventory levels are stable going into the second half of the year.

“Tariffs appear overstated for now, and Amazon remains the go-to destination for online deals and continues to draw strong consumer and brand engagement,” Thill wrote in a recent note.

Thill sees AWS emerging as the preferred platform for complex AI workloads, meaning that enterprise customers are increasingly turning to Amazon as they look to integrate AI into their business model.

Jefferies maintains its “Buy” rating and has a price target of $265 for the stock, implying upside of about 14%.

Amazon’s latest plans to deal with tariffs, and potentially raise prices, as so many other companies have done, are likely to be a key theme on the earnings call.

Some Amazon customers loaded up earlier this year on items that could get hit with President Donald Trump’s tariffs, CEO Andy Jassy said in May. He said Amazon’s product selection and ability to source from sellers in China give it an edge over other retailers, especially when it comes to offering low prices.

Jassy also said then that it wasn’t clear exactly what effect tariffs would have on the prices of products sold on Amazon. The company’s guidance for the second quarter was below what analysts were hoping for, in part because Amazon was waiting to see what would happen with tariffs.

Three months later, on the eve of another trade negotiation deadline, investors will be listening for an update.

Amazon is shaping up to be one of the most undervalued Magnificent Seven companies, UBS analyst Stephen Ju said.

The stock’s valuation was deeply revised downwards at the height of tariff volatility earlier this year, but it’s poised for a comeback as trade deals solidify.

“We believe Amazon to be ‘most-coiled’ among our coverage given the more extensive investments across e-commerce, AWS, content/advertising, and Kuiper,” Ju wrote.

UBS expects AI spending to continue rising. Ju is raising his 2025 capex forecast for Amazon from $107 billion to $112 billion, citing improving cloud infrastructure sentiment.

The bank reiterated its “Buy” rating and raised its price target from $249 to $271, implying about 18% upside.

Second quarter

Net sales estimate $162.15 billionEPS estimate $1.33Online stores net sales estimate $59.13 billionPhysical stores net sales estimate $5.49 billionThird-Party Seller Services net sales estimate $38.97 billionSubscription Services net sales estimate $11.92 billionAWS net sales estimate $30.77 billionNorth America net sales estimate $97.36 billionInternational net sales estimate $34.21 billionThird-party seller services net sales excluding F/X estimate
+7.49%Subscription services net sales excluding F/X estimate +9.68%Amazon Web Services net sales excluding F/X estimate +17%Operating income estimate $16.97 billionOperating margin estimate 10.4%North America operating margin estimate +5.78%International operating margin estimate 1.87%Fulfillment expense estimate $25.74 billionSeller unit mix estimate 61.5%

Third quarter

Net sales estimate $173.25 billionOperating income estimate $19.41 billionCapital expenditure estimate $26.44 billion

Full year

Capital expenditure estimate $104.42 billion