tapebrief
AMZN · Q3 2025

AMZN · Q2 2025 Earnings

Cautious

Amazon

Reported July 31, 2025

30-second summary

Revenue grew 13% YoY to $167.7B and operating margin reached 11.4% (+150bps YoY), with AWS at $30.9B (+17.5%) and a $195B backlog up 25% YoY. The story management is selling is demand-saturated AI infrastructure throttled by power and supply — AWS would grow faster if it could. Q3 FY2025 guidance of $174.0–179.5B (10–13% YoY) and operating income of $15.5–20.5B implies a wide profitability band that hints at capex-heavy reinvestment continuing to weigh on near-term margin.

Headline numbers

EPS

Q2 FY2025

$1.68

Revenue

Q2 FY2025

$167.70B

+13.0% YoY

Gross margin

Q2 FY2025

51.8%

Operating margin

Q2 FY2025

11.4%

Key financials

Q2 FY2025
MetricQ2 FY2025YoY
Revenue$167.70B+13.0%
EPS$1.68—
Gross margin51.8%—
Operating margin11.4%—

Guidance

Prior quarter data unavailable — comparison not possible.

Segment performance

Q2 FY2025
SegmentQ2 FY2025YoY
AWS$30.9B+17.5%
Online Stores$61.5B+11.0%
Third-Party Seller Services$40.3B+11.0%
Advertising Services$15.7B+23.0%
Subscription Services$12.2B+12.0%
Advertising Services Growth23% YoY—
AWS Customer Growth17.5% YoY—

Platform metrics

Q2 FY2025
SegmentQ2 FY2025
Worldwide Paid Units Growth12% YoY
Worldwide Seller Unit Mix62%

Profitability

Q2 FY2025
SegmentQ2 FY2025
AWS Operating Margin32.9%
North America Operating Margin7.5%
International Operating Margin4.1%
Operating Cash Flow (TTM)$121.1B

Other KPIs

Q2 FY2025
SegmentQ2 FY2025YoY
North America$100.1B+11.0%
International$36.8B+16.0%

Management tone

This section leans on Q&A substance rather than cross-quarter drift, given this is our first coverage of the name.

AWS framing pivoted from "growth versus competitors" to "supply versus demand." Pushed by Anmuth on why AWS trails hyperscaler peers on growth rate, Jassy reframed the question entirely: "We have more demand than we have capacity." The $195B backlog (+25% YoY) is now the headline metric management wants investors to anchor on, not the 17.5% revenue print. The implicit message: print growth is a capacity story, and capacity is being added.

On tariffs, management is conspicuously refusing to call the all-clear. Through H1, "no diminished demand or broad-scale ASP increases observed." But the forward language — "depending on tariff settlement, inventory depletion timing, and cost absorption" — leaves all three variables live. The wide Q3 FY2025 operating income band ($15.5–20.5B) is consistent with management not yet knowing where tariff costs land.

AI productization shifted from roadmap to revenue. Specific traction metrics now anchor the AWS AI narrative: Kiro at 100,000 developers in 5 days, Bedrock's Claude 4 as fastest-growing model ever on the platform, Nova as the #2 foundation model in Bedrock. A quarter ago these were directional claims; this quarter they have numbers attached.

Q&A highlights

Doug Anmuth · JP Morgan

How are tariffs being absorbed across suppliers, Amazon, and consumers, and will this change? Also, is AWS's slower growth versus competitors due to demand or supply constraints?

On tariffs: Through H1 2025, no diminished demand or broad-scale ASP increases observed; future impact uncertain depending on tariff settlement, inventory depletion timing, and cost absorption. On AWS: Larger base makes year-over-year comparisons harder; AWS maintains operational, security, and functional advantages; company has more demand than capacity; $123B annualized revenue run rate with still-early opportunity.

No broad-scale ASP increases seen in H1 2025AWS $123 billion annualized revenue run rateAWS growing 17.5% year-over-yearMore demand than AWS capacity currently available

Mark Mahaney · Evercore

What is the AWS backlog? Will supply constraints resolve in H2 2025? How will Alexa Plus drive financial benefits (engagement, services revenue, advertising, retail)?

AWS backlog: $195B, up 25% YoY. Supply constraints (power is biggest) will improve each quarter but take several quarters to fully resolve. Alexa Plus: Much better intelligence and capability than prior version; can take actions; millions of customers; high ratings and expanded usage. Revenue opportunities: shopping, advertising, and potential future subscription beyond $19.99/month for non-Prime members.

AWS backlog $195 billion, up 25% year-over-yearPower is single biggest AWS constraintAlexa Plus: millions of customers now, higher ratings and usage than prior versionAlexa Plus pricing: Prime members free, non-Prime $19.99/month

Colin Sebastian · Baird

What are the drivers of International segment margin expansion and is it sustainable? Where does Project Kuiper stand relative to launch timing and long-term ambitions?

International margins up 320bps YoY to 4.1%; continuation of ~700bps improvement over 10 quarters. Drivers: established countries (UK, Germany, Japan) reaching US-like margins; emerging markets (8 launched in 5 years) progressing through profitability journey; transportation productivity gains; faster speeds at lower costs. Kuiper: 400-500M households without broadband globally; modern tech competitor to incumbent; advantaged performance; compelling pricing; strong enterprise/government pre-launch agreements; targeting commercial beta late 2025 or early 2026; some rocket provider delays but most launches secured.

International operating margin 4.1%, up 320bps year-over-year~700bps margin improvement in International over 10 quarters8 emerging countries launched in last 5 yearsProject Kuiper: 400-500 million households without broadband globally

Brian Novak · Morgan Stanley

Does AWS rebut the narrative of falling behind competitors in Gen AI? What are focal points to stay ahead? Should AWS accelerate in H2 and 2026 given opportunity size and capabilities?

AI still very early; top-heavy with few large frontier models and coding agents; most Gen AI apps still in pilots. AWS has significant enterprises and startups running on its services. Stack analysis: compute/hardware (Trainium 2 custom silicon ~30-40% better price-performance than alternatives; building 3rd version); middle layer (SageMaker, Bedrock for leverage); top layer (agents still hard to build; Strands and AgentCore tools address this). Legacy modernization agents (Transform, Curo) compelling. 85-90% IT spend still on-premises; inference will ultimately drive cost at scale; AWS advantage in data gravity and co-location will matter. Very optimistic on AWS AI future.

Trainium 2 custom silicon ~30-40% better price-performance than GPU alternativesBedrock Anthropic Claude 4 fastest growing model ever in BedrockAmazon Nova now 2nd most popular foundation model in BedrockStrands: 2,500 GitHub stars, 300,000+ PyPI downloads

Ron Josie · Citi

How is Amazon adopting generative AI internally? What improvements in speed to market and efficiency have resulted?

AI is biggest technology transformation of our lifetime; will change every customer experience and how Amazon works (coding, analytics, research, finance, business process automation, customer service). Company building tools and agents internally (Curo for coding, Connect for call centers). Focus: embrace and shape AI versus be shaped by it. Goal: enable teammates to invent faster and more expansively; make jobs more enjoyable by automating rote work; build deep end-to-end ownership.

AI described as biggest technology transformation of lifetimeInternal tools: coding agents (Curo), AWS Connect (AI-powered call center software)Internal focus: faster invention for customers, more enjoyable teammate experiencesStrategic approach: embrace and shape AI adoption internally

What to watch into next quarter

AWS revenue growth versus 17.5% — does the backlog convert to print growth, or does power-constrained capacity cap the line at high-teens? Watch for re-acceleration above 18% as evidence the supply story is real.

Q3 FY2025 operating income landing inside the $15.5–20.5B band — the lower half would confirm accelerated AI capex is biting margin; the upper half would signal disciplined reinvestment. The midpoint ($18B) is roughly flat with prior-year $17.4B.

Tariff impact on retail unit economics — first quarter where management acknowledges a potential ASP move or margin compression would mark a meaningful negative shift. Watch North America operating margin against the 7.5% Q2 FY2025 print.

International margin trajectory — does the +320bps YoY pace hold, or does the easy compares period end? A deceleration toward +100–150bps would suggest the structural improvement is maturing.

Alexa Plus and Kuiper monetization signals — any disclosure of Alexa Plus paid subscriber count or Kuiper commercial-beta firm date would be a material new data point; both are currently optionality, not earnings drivers.

Sources

  1. Amazon Q2 FY2025 earnings press release (SEC filing): https://www.sec.gov/Archives/edgar/data/1018724/000101872425000084/amzn-20250630xex991.htm
  2. Q2 FY2025 earnings call prepared remarks and Q&A.

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