Amazon stock fell late Thursday after the tech giant gave a mixed outlook for the current quarter – further fueling investor fears about the impact of tariffs on the company's e-commerce empire. Amazon's profit-driving cloud business recorded March quarter revenue slightly below Wall Street expectations, also pushing the stock lower.
Amazon's overall top- and bottom-line results for the first quarter beat Wall Street estimates. The Seattle-based company said that it earned an adjusted $1.59 per share on sales of $155.7 billion for the March-ended quarter. Analysts polled by FactSet projected Amazon would post adjusted earnings of $1.37 per share on sales of $155.2 billion. Sales increased 9% while earnings increased 62% year over year.
But the closely-watched Amazon Web Services cloud business grew 17% to $29.3 billion. Analysts were projecting $29.45 billion in sales, according to FactSet. The slight miss comes after Microsoft posted stronger-than-expected cloud results Wednesday.
Investors are likely to be far more focused on Amazon's outlook. Amazon stock has been pushed lower by fears that tariffs enacted by President Donald Trump will push prices higher or lead to shortages for some products. On that note, Amazon offered a mixed bag.
Amazon said it expects $161.5 billion in sales for the current June-ending quarter, based on the midpoint of the company's given range. That was slightly ahead of analysts projections for $161.2 billion in Q2 sales for Amazon prior to the report.
However, Amazon projected $15.3 billion in operating income for Q2, well below the $17.6 billion in operating income that analysts were projecting prior to the report.
On the stock market today, Amazon stock is down more than 2% at 185.79 in recent after-hours action.
Amazon CEO Jassy Says 'Uncertain Moment For Consumers'
On a call with analysts Thursday, Amazon Chief Executive Andy Jassy said the company remains focused on keeping prices low, particularly in response to an "uncertain moment for consumers."
Jassy added that the company has not seen any "attenuation," or slowing, of demand in response to tariffs. Amazon has also not seen average selling prices for products "go up, yet," he added.
"Amazon is not uniquely susceptible to tariffs," Jassy told analysts. "As it relates to China, retailers who aren't buying directly from China are typically buying from companies who themselves are buying from China."
Meanwhile, Amazon's advertising business was its fastest-growing division for the quarter. Ad revenue increased 19% year over year to $13.9 billion. That beat Wall Street estimates and marked a slight acceleration from the 18% sales growth Amazon posted in Q4.
"The Q2 operating income outlook was a tad light, but given the dynamic macro environment, including tariff uncertainty, we think it could have been a lot worse," CFRA analyst Arun Sundaram wrote to clients following the report Thursday. "Also, Amazon has historically beat the top end of its guidance range."
Amazon Stock Down 13% This Year
Prior to earnings, Amazon gained 3% in regular Thursday trading. Shares have lost 13% this year compared to a 4.7% loss for the S&P 500. Amazon stock has slumped since publishing its fourth-quarter results in early February. The December-ended quarter results beat earnings estimates but included a lower-than-expected sales forecast for Q1. Tariff concerns this month pushed the stock lower in recent weeks, though Amazon has recovered to near its pre-April levels.
Coming into the report, Amazon stock had an IBD Composite Rating of 81 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
