Amazon showed up to Q1 2025 earnings day ready to flex—but Wall Street still gave it the cold shoulder. The e-commerce titan beat both top and bottom line expectations, flaunting a $1.59 EPS on $155.7 billion in revenue. Investors? They responded by yanking the stock down 4.6% in after-hours trading. Why? Because sometimes, even good news feels like a lukewarm Prime Day deal.
Let’s start with AWS—Amazon’s crown jewel. It posted $29.3 billion in revenue, up a solid 16.9% year-over-year. But that’s a slowdown from 18.9% growth last quarter, making this the third straight quarter AWS came to light. Cue the investor anxiety. Even with a blockbuster $11.55 billion in operating income and the fattest margins AWS has seen since Obama was in office (39.5%), it wasn’t enough to make anyone forget Microsoft just lapped them with hotter Azure growth and rosier guidance.
So Why Is AWS Slowing Down?
The market’s maturing—Most enterprises already moved the easy stuff to the cloud. New growth? It’s harder, slower, and more expensive to win.
Competition is gaining ground—AWS is still the king of the hill, holding 30% of the global cloud infrastructure market in Q4 2024. But Azure, at 21%, and Google Cloud, at 12%, are narrowing the gap. Microsoft’s been racking up high-profile wins, and Google’s AI-first approach is pulling in new business. AWS may still lead, but it’s no longer lapping the field.
Multi-cloud is mainstream—Enterprises are hedging their bets, spreading workloads across multiple providers to avoid vendor lock-in. That means AWS isn’t the default one-stop shop it used to be—it’s one of three key players in a high-stakes cloud turf war.
Customers are cutting back—Cloud bills aren’t sacred anymore. CFOs are trimming fat everywhere, and “optimize your spend” is now a board-level directive.
Internal bets take time—All that AI chip talk? Still early days. The capex is massive, and not every client is ready to jump on the Trainium2 hype train.
Tariffs ripple everywhere—No, AWS doesn’t import goods. But their customers do. Higher costs downstream mean tighter IT budgets upstream.
So yeah, AWS is still massive. But the growth curve is flattening, and if you’re hoping for another rocket ship trajectory—you might want to check the launchpad.
Back in the ad world, Amazon’s online advertising business did $13.9 billion, up 19% YoY. Another strong point—but a whisper below last quarter. It’s a win, but not one that gets champagne corks popping on Wall Street.
Then there’s guidance. Amazon expects Q2 operating income between $13 billion and $17.5 billion. Analysts were hoping for $17.8 billion. That guidance range? It’s wide enough to drive a fleet of Amazon trucks through—and none of them are carrying confidence.
And yes, tariffs are looming large. With Trump’s 145% duty on Chinese imports about to wreck your shopping cart, Amazon’s low-cost storefront “Amazon Haul” might soon feel more like “Amazon Ouch.”
CEO Andy Jassy threw out all the greatest hits—selection, pricing, AI, chips, even a Reacher Season 3 flex (54.6M viewers in 19 days). But at some point, even the best playlist gets old if it’s not followed up with new hits.
The Take
AWS’s three-quarter stumble isn’t just a blip—it’s a blinking red light for Amazon’s growth narrative. The cloud was supposed to be the bulletproof moneymaker that offset slower retail margins, ad fatigue, and, now, tariff chaos. But when your most profitable segment starts missing, Wall Street stops giving you the benefit of the doubt.
Add in soft guidance, intensifying Azure pressure, and macro headwinds like Trump’s tariff parade, and you’ve got a company that feels less invincible than it did even six months ago.
Yes, Amazon’s still a powerhouse. But it’s facing real friction across all fronts—cloud, commerce, content, and cost. Investors are asking a simple question: if not AWS, then what? And right now, Amazon’s answer feels more like “wait and see” than “watch us win.”
