TLDR
- Amazon beat Q2 earnings expectations with $1.68 EPS versus $1.33 expected and revenue of $167.7 billion versus $162.1 billion expected
- Stock fell over 8% in premarket trading despite the earnings beat due to disappointing AWS guidance
- AWS operating income guidance of $15.5-$20.5 billion for Q3 missed Wall Street’s $19.5 billion expectation
- Competitors Microsoft and Google reported stronger cloud performance, with Microsoft’s Azure hitting $75 billion and Google’s cloud revenue climbing 32%
- Q3 revenue guidance of $174-$179.5 billion exceeded analyst expectations of $173.2 billion
Amazon delivered a classic case of good news, bad news on Thursday evening. The e-commerce giant crushed earnings expectations but still managed to send investors running for the exits.
The company reported second quarter earnings per share of $1.68, handily beating Wall Street’s $1.33 estimate. Revenue came in at $167.7 billion, well above the expected $162.1 billion.
But here’s where things got interesting. Despite the solid beat, Amazon shares tumbled more than 8% in premarket trading Friday morning.
The culprit? Amazon Web Services failed to live up to the cloud computing hype that competitors had been building.
AWS Guidance Disappoints
AWS revenue for the quarter hit $30.8 billion, just barely topping expectations of $30.7 billion. While that represents growth from $26.2 billion in the same quarter last year, it wasn’t the knockout punch investors were hoping for.
The real disappointment came in the guidance. Amazon projected AWS operating income between $15.5 billion and $20.5 billion for the third quarter.
Wall Street was expecting $19.5 billion. That midpoint guidance of $18 billion suddenly looked less impressive.
Compare that to the competition, and Amazon’s cloud performance seems even more lackluster. Microsoft reported its Azure business generated $75 billion in fiscal 2025.
That helped push Microsoft’s market cap past the $4 trillion mark, making it only the second company after Nvidia to reach that milestone.
Competition Heats Up
Google wasn’t sitting idle either. The search giant reported cloud revenue climbed 32% during the quarter.
Even more impressive, Google’s cloud backlog – those purchase commitments from customers not yet realized – jumped 38%. Google’s search business also performed better than expected with 12% year-over-year growth.
Amazon’s online store sales came in at $61.4 billion for the quarter. The consumer side of the business showed resilience that surprised analysts.
Wedbush analyst Scott Devitt noted the consumer strength ahead of earnings. He quoted CEO Andy Jassy from May saying “we have not seen any attenuation of demand at this point.”
Amazon’s overall Q3 guidance did provide some comfort to investors. The company projected revenue between $174 billion and $179.5 billion for the third quarter.
That range topped analyst expectations of $173.2 billion. The guidance suggests Amazon’s broader business remains on solid footing.
The stock closed Thursday at $234.11, up $3.92 or 1.70% for the day. But premarket trading Friday showed shares down to $215.67, a decline of $18.44 or 7.88%.
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