Amazon’s stock experienced a decline in after-hours trading following the release of its first-quarter earnings report, which revealed mixed results and disappointing guidance for the upcoming quarter. While the e-commerce giant exceeded expectations in several key metrics, concerns emerged about its cloud computing division and future profit outlook.
The company reported earnings per share of $1.59, surpassing analysts’ estimates of $1.36, though down from $1.86 in the previous quarter. Total revenue reached $155.67 billion, representing an 8.6%
year-over-year increase and beating expectations of $155.16 billion.
In its core retail segments, Amazon showed steady growth. Online store sales grew 5% to $57.41 billion, while physical store revenue increased 6.4% to $5.53 billion. The company’s subscription services, including Prime memberships, saw a 9.3% rise to $11.72 billion. However, third-party seller services fell short of expectations, generating $36.51 billion in revenue, missing the projected $36.98 billion.
The performance of Amazon Web Services (AWS), the company’s cloud computing division, drew particular attention from investors. AWS revenue grew 17% year-over-year to $29.27 billion, slightly missing analysts’ expectations of $29.36 billion, marking the first
significant slowdown in top-line growth in two years. Despite this, AWS demonstrated impressive profitability with a record operating margin of 39.45%, substantially exceeding the expected 35.25%.
Operating metrics showed overall strength, with total operating income reaching $18.41 billion, a 20% increase year-over-year. The company’s consolidated operating margin hit a new record of 11.8%, marking its fourth consecutive quarter of growth. North American operations achieved a 6.29% profit margin, though slightly below expectations, while international margins improved to 3.30%.
Fulfillment expenses rose 10% to $24.59 billion, exceeding estimates of $23.78 billion, while the seller unit mix remained stable at 61%, slightly below the anticipated 61.8%. These metrics may face additional pressure in a potential tariff environment.
The main factor driving the stock’s decline was Amazon’s guidance for the second quarter. The company projected revenue between $159.0 billion and $164.0 billion, aligning with Wall Street’s expectation of $161.4 billion. However, the operating income forecast of $13.0 billion to $17.50 billion fell short of the $17.82 billion analyst consensus.
This outlook suggests revenue growth will show modest improvement in the second quarter, rising just above 9%, following Q1’s slowest growth rate since 2022. The company noted that foreign exchange movements are expected to have a minimal impact of about 10 basis points on these projections.
The market reaction reflected the mixed nature of these results, with Amazon’s stock initially rising before turning lower in after-hours trading. While the company demonstrated continued strength in its retail operations and impressive profit margins, particularly in AWS, concerns about future growth and profitability appeared to overshadow these achievements in investors’ immediate response to the earnings report.
The results came amid heightened market attention to major technology earnings, with Amazon’s report following strong performances from other tech giants Microsoft and Meta. Prior to the earnings release, market sentiment had been divided, with short-term traders expressing skepticism about AWS and North American sales growth, while
longer-term investors remained optimistic about AWS reacceleration and potential artificial intelligence opportunities in e-commerce.