Amazon is set to report its second-quarter 2025 earnings after the U.S. market close on July 31.

In the age of AI, Amazon appears to be falling behind. While Microsoft, Google, and Meta have all launched consumer-facing AI applications, Amazon has made little headway in this space.

Due to lackluster AI progress, cautious consumer spending driven by tariffs, and competition from low-cost Chinese e-commerce platforms, Amazon’s stock has underperformed the broader market this year, rising only around 5%.

Market expectations for Amazon’s Q2 revenue stand at $162.02 billion, up 9.49% year-over-year. EPS is expected at $1.32, a 5.03% increase from the prior year. The average analyst price target is $257.

🛒 E-Commerce: Defending Core Business as Temu Advances, Logistics a Key Moat

Amazon’s core e-commerce segment is projected to grow 6% year-over-year.

In response to fierce competition from Temu and Shein in Q4 last year, Amazon launched “Amazon Haul,” a discount storefront featuring ultra-low prices and mostly free shipping. The launch was well received by the market.

Now that the U.S. no longer offers tax exemptions for small parcels—once a key advantage for Chinese e-commerce players—Amazon's unmatched domestic logistics network further solidifies its dominance.

This year, Amazon extended its Prime Day promotion to four days, including Amazon Haul in the discounts, with prices slashed up to 40% across product lines.

According to Adobe Analytics, online U.S. retail sales reached $24.1 billion from July 8–11, up 30.3% year-over-year, beating the expected 28.4% growth. Amazon was the biggest winner.

Additionally, Amazon may raise its annual Prime membership fee by $20 to $159 next year. JPMorgan estimates this could add around $3 billion in annual revenue without materially impacting membership growth.

☁️ AWS: Still #1 Globally, but Microsoft and Google Are Closing In

While e-commerce remains Amazon’s foundation, AWS is its profit engine and most closely watched valuation driver.

Q2 AWS revenue is projected to grow 17.4% year-over-year.

Thanks to economies of scale and disciplined cost control, AWS achieved a record operating margin of 39.5% last quarter.

AWS remains the global leader in cloud services. According to Canalys, AWS held a 32% market share in Q1 2025, ahead of Microsoft Azure’s 23% and Google Cloud’s 10%.

However, Microsoft and Google are aggressively gaining ground. Last quarter, AWS growth slowed to 17%, while both Azure and Google Cloud maintained growth above 30%.

Given their AI innovation and client traction, AWS cannot afford to lose momentum.

📺 Advertising: Fastest-Growing Segment, Supercharged by Data

Amazon’s fastest-growing segment is its advertising business.

Last quarter, advertising revenue rose 17.7% to $13.93 billion—outpacing AWS.

Amazon’s vast customer database gives it a unique edge in optimizing ad algorithms and boosting conversion rates.

Channel checks show robust demand for Sponsored Listings, Prime Video, and DSP ads. Partnerships with Roku and Disney have also expanded Amazon’s ad distribution channels.

Advertising is increasingly contributing to overall margin improvement.

🏗️ Capex: In the AI Race, Only One Direction—Up

In the early phase of the AI era, tech giants have only one direction for capital expenditure: upward.

Amazon’s Q2 capex is expected to reach $25–26 billion, with full-year capex exceeding $100 billion—largely driven by AI infrastructure.

In addition to data centers, Amazon’s low-Earth orbit (LEO) broadband satellite project, “Project Kuiper,” is a major cash burner.

Founder Jeff Bezos’ space venture, Blue Origin, competes directly with Elon Musk’s SpaceX, making both men key players in the commercial space race.

💰 Tariff Trouble: August 1 Deadline Looms

Amazon is one of the companies most exposed to retaliatory tariffs. While its supply chain spans the globe, about 60% of its revenue comes from North America, making it vulnerable to trade tensions.

Absorbing tariff costs would compress profit margins, while passing them to consumers could hurt sales.

Reports suggest Amazon has raised prices on lower-cost goods in response, but the company’s full strategy will likely be outlined during the upcoming earnings call.