As Amazon approaches its Q2 2025 earnings report, the e-commerce and tech giant is in the spotlight among investors and analysts. With projected revenue of $162 billion, the company is expected to post a year-on-year growth of approximately 9%. Earnings per share (EPS) are forecasted at $1.33, up from $1.26 in the previous quarter.
Market focus remains concentrated on two of Amazon’s primary growth engines: Amazon Web Services (AWS) and its digital advertising business. Both segments are expected to grow around 17% year-over-year and contribute significantly to the company’s profitability. AWS, in particular, is in the limelight due to its strategic role in powering the artificial intelligence (AI) needs of large enterprises. Analysts cite the continued surge in AI computing demand, positioning AWS as a key infrastructure provider in this space.
However, not all analysts are entirely bullish. Despite AWS’s sustained growth, there are concerns that profit margins could be squeezed due to rising capital expenditures (capex), including Amazon’s ambitious Project Kuiper, a global satellite initiative. Additionally, global uncertainty—especially related to U.S.–China trade tariffs—remains a key external risk that could affect Amazon’s operational costs and margins in the near term.
Nevertheless, many analysts maintain a bullish medium-to-long-term outlook on Amazon’s stock. UBS, for example, recently raised its price target to $271, calling Amazon the most undervalued big tech stock. Jefferies and Bank of America maintained their targets at $265, while Morgan Stanley labeled Amazon as their “top pick,” projecting a target price as high as $300—with a bullish scenario of up to $350, or nearly 50% above current prices.
With high expectations, investors will be closely watching Amazon’s earnings results and management commentary—particularly regarding AWS margins, AI-related spending, and how the company plans to manage tariff risks. If results and forward guidance beat expectations, Amazon shares could rally further. On the other hand, if earnings disappoint, short-term volatility could spike, as options markets are currently pricing in a ±5% post-earnings move.
Financial Performance Forecast
Pre-Earnings Q2 FY2025 Expectations
Key Forecasts:
- Q2 2025 revenue is expected to hit $162 billion, up roughly 9% YoY, aligning with the upper end of management’s guidance range ($159–164 billion).
- Adjusted EPS is projected at $1.33, an increase from $1.26 in the previous quarter.
Growth Drivers:
- AWS and digital advertising are both forecasted to grow approximately 17% YoY, remaining the primary contributors to margin and profitability expansion.
- AI-related demand is expected to rise steadily, supported by increased computing capacity and strategic AI partnerships such as the one with Anthropic. AWS is seen as the backbone infrastructure for enterprise AI workloads.
- Analysts from Bank of America, UBS, and Jefferies estimate AWS short-term growth at around 19–20%.
Analyst Price Targets:
- UBS raised its price target to $271, calling Amazon the most undervalued among Big Tech, implying an 18% upside.
- Jefferies kept its target at $265, citing resilient consumer demand and strong ad business momentum.
- Bank of America remains optimistic about AWS growth, with a target price also around $265.
- Morgan Stanley named Amazon its “top pick,” raising its target to $300, and set a bull-case scenario of $350 (over 50% upside).
Risks to Watch:
- Trade tariff uncertainty remains a key concern, though Amazon is seen as better positioned to weather it than traditional retailers.
- AWS margins could drop to around 28%, although long-term consensus remains in the 34–39% range.
- Ongoing capital spending for AI and initiatives like Project Kuiper may pressure short-term margins and weigh on free cash flow.
EARNING PROJECTION PREDICTION
WHAT THE ANALYST STATED
