Amazon’s latest earnings report has left investors underwhelmed, with the company’s key cloud computing division, Amazon Web Services (AWS), posting slower-than-expected revenue growth. As reported by The Times UK, shares in the tech giant dropped as much as 5% in after-hours trading on Thursday, reflecting concerns over the performance of a business segment long seen as a core profit engine.
For the first quarter of 2025, AWS revenue rose 16.9% to $29.27 billion — missing analysts’ expectations of 17.4% growth and $30.9 billion in sales. This marks the slowest pace of growth for AWS in five quarters and contrasts sharply with Microsoft’s Azure, which exceeded expectations earlier this week.
“It’s always felt like AWS and Google Cloud were taking the most share for quite some time, but maybe that’s starting to turn because Microsoft posted great numbers,” said Dave Wagner, a portfolio manager at Aptus Capital Advisers.
Overall, Amazon reported $155.7 billion in total revenue for the quarter ending March 31, slightly beating the forecast of $155.04 billion. However, its outlook for operating income — projected between $13 billion and $17.5 billion — came in below the average analyst estimate of $17.7 billion, further rattling market confidence.
Despite the cloud disappointment, Amazon offered a brighter forecast for second-quarter sales, estimating net revenue between $159 billion and $164 billion. This gave investors some reassurance amid broader uncertainties, including the potential impact of high U.S. tariffs on Chinese imports, a policy revived under President Trump. Some Amazon sellers have already indicated plans to skip the company’s Prime Day in July due to cost concerns.
Ad sales emerged as a strong point for the company, with Amazon posting a 19% rise to $13.92 billion, beating expectations. The company continues to solidify its position as a major advertising player, behind only Meta and Alphabet.
Amazon is also accelerating its investment in artificial intelligence and infrastructure. The firm spent over $25 billion on property and equipment in Q1, up significantly from $14.92 billion a year ago. It has been scaling up its AI models, data center capacity, and chip development efforts — including those powered by Nvidia and its own silicon — to stay competitive in the rapidly evolving AI landscape.
Following the earnings report, Amazon shares closed down 1.7% at $186.63 in after-hours trading, trimming heavier early losses but underscoring investor unease about the tech giant’s cloud momentum.
