Amazon stock was pushing higher Thursday, with the e-commerce and cloud-computing behemoth set to report second quarter results later today. Strong results posted Wednesday by Meta Platforms and Microsoft are boosting optimism about AI powering growth for the biggest names in tech.
Amazon is battling to be an AI leader itself. But the story for its stock this year has been complicated. The tariff deal between the U.S. and China helped Amazon stock rally back from April lows. But Amazon is still chasing highs from early February and may have some questions to answer for investors before it can reach new heights. Overall, Amazon stock has underperformed the S&P 500 this year.
"Investor sentiment is broadly positive, with expectations improving in recent weeks following a disappointing 2Q guide that was delivered in early May," Wedbush analyst Scott Devitt wrote to clients Wednesday. "Still, profitability forecasts for the year remain depressed as investors weigh the impact of tariff/macro uncertainty, currency risk, rising expenses to support AI initiatives, and an uncertain cost trajectory associated with Project Kuiper."
Devitt rates Amazon stock outperform, or buy.
Overall, analysts polled by FactSet expect Amazon's adjusted earnings to increase 5% to $1.33 per share. Sales are expected to increase 10% to $162.19 billion.
Investors typically home in on Amazon's operating income. The stock fell in early May after Amazon gave a wider-than-expected range for its Q2 operating income. Analysts are looking for $16.87 billion in operating income, up 15% from a year earlier.
Here's what to watch beyond those numbers:
Tariff Watch For Amazon
Even with lower tariffs on China, analysts are parsing what the new fees on imports will mean for U.S. consumer spending.
UBS analyst Stephen Ju raised his Amazon stock price target to 271 from 249 in an earnings preview note to clients on Monday. Ju said Amazon likely benefited from efforts by its third-party sellers to stockpile goods ahead of the import levies.
"There may have been enough merchandise for consumers to see lower prices (versus elsewhere) through Q2 and Q3," Ju wrote. "This places Amazon in a position to gain incremental share in the near term."
While the analyst expects prices will rise later this year because of tariffs, he noted that UBS has "taken off the table" expectations for a recession in the second half of the year and into 2026. That allowed him to boost estimates for overall Amazon gross merchandise value through next year.
Meanwhile, Amazon touted the success of its Prime Day shopping event earlier this month, which could help lift the revenue guidance it provides for the current September-ending quarter.
"One could argue that the real impacts from these new tariffs haven't been felt by the U.S. consumer just yet, but the current environment is a bit more favorable than expected, and healthy Prime Day(s) data suggests we might expect a solid back-to-school season," Stifel analyst Mark Kelley told clients Monday. He rates Amazon a buy.
Analysts are expecting Amazon's online stores revenue to increase 6.5% year over year to $58.99 billion, an acceleration from 5% growth in Q1. The revenue Amazon collects from third-party sellers on its marketplace is forecast to grow 7% to $38.74 billion, according to FactSet.
Amazon's high-margin advertising business will also be a focus for investors. Ad revenue is projected to rise 17% to $14.99 billion, according to FactSet.
AWS Growth In Focus For Amazon Stock
While tariffs have raised concerns about Amazon's retail operations, investors typically pay the closest attention to Amazon's cloud business. Amazon Web Services is a crucial profit-driver for the tech giant. Last year the cloud business accounted for 17% of Amazon's total revenue but 58% of its total operating income.
William Blair analysts Dylan Carden and Arjun Bhatia reiterated an outperform call for Amazon stock in a note last week. They expect the growth from AWS will be a major focus for investors.
"We are optimistic that growth can be robust through the remainder of 2025, as more AI and agentic workloads move into production," Carden and Bhatia wrote.
Strong results for Google's cloud business offered an "early positive sign," the William Blair note added. Google parent company Alphabet reported Q2 results last week.
Shares of Amazon's other large cloud rival, Microsoft, soared Thursday after the tech giant said Azure cloud revenue grew 39% year over year, beating its target range of 34% to 35%.
Analysts are forecasting 17% sales growth for AWS in Q2, roughly flat with the growth rate in the March quarter.
The company has previously told analysts that its AI revenue is constrained by current data center capacity.
Amazon plans for roughly $100 billion in capital expenditures to scale up and meet demand. Investors will be watching to see if that spending estimate goes up. Google raised its capex guidance when it reported results last week.
Amazon Stock Underperforming S&P 500
Meanwhile, Amazon stock is up 1.4% at 233.34 in recent action on the stock market today.
Amazon stock is up roughly 5% year to date, trailing a nearly 8% gain for the S&P 500.
But that's a vast improvement compared to earlier this spring. Amazon stock has bounced back from a steep spring slump with an 18% gain from May through June after the U.S. eased tariffs on Chinese goods.
Shares are trading just above 230. Shares have edged higher in the weeks since Amazon stock broke out above a cup-with-handle buy point of 214.84 on June 9, as shown on IBD MarketSurge.
The IBD Stock Checkup tool, meanwhile, shows Amazon stock holds an IBD Composite Rating of 95 out of a best-possible 99. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
