Amazon CEO Andy Jassy looks on during an Amazon Devices launch event in New York City, U.S., February 26, 2025. REUTERS/Brendan McDermid
Brendan Mcdermid | Reuters
Amazon on Thursday reported second-quarter earnings that beat expectations on most metrics, but the results weren’t good enough to please Wall Street.
Amazon stock slid following the release and throughout the conference call. Shares were down about 7% Friday.
Profit guidance was weaker than expected, while cloud growth underwhelmed investors.
That overshadowed an otherwise upbeat report that included strong revenue and profits, steady retail growth and a 23% increase in advertising sales. Amazon also offered a rosy revenue forecast for the current quarter.
Here are three key takeaways from Amazon’s earnings:
AI spending boost
Amazon reported that it spent $31.4 billion on capital expenses in the last quarter, and the company expects that to be “reasonably representative” of its spending in the second half of the year. In the first quarter, Amazon’s capital expenditures exceeded $24 billion.
Taken together, it means that Amazon could spend an upwards of $118 billion on capital expenditures this year, up from its previous forecast of $100 billion. Amazon’s capex, which hit $83 billion a year ago, is primarily going toward building out tech infrastructure to support artificial intelligence demand.
Amazon’s competitors are also throwing big money at AI.
On Wednesday, Meta lifted its forecast for capital spending to a range of $66 billion to $72 billion. Google parent Alphabet raised its capital spend last week to $85 billion this year.
The question on investors’ minds is when these big AI bets will begin to pay off in revenue or profit.
Amazon CEO Andy Jassy hinted the company’s progress on AI has improved its “operational efficiency and business growth,” but offered few specifics beyond that.
Amazon has also said previously that generative AI is contributing revenue to AWS at an annualized rate equivalent to “multiple billions of dollars.”
On a conference call with investors, Jassy pointed to Alexa+, an upgraded version of its digital assistant, as a way it could monetize AI. The service, which launched in early access in late March, is $19.99 a month, or free for Prime members.
“I think over time, you could also imagine, as we keep adding functionality that there could be some sort of subscription element beyond what there is today,” Jassy said.
Jassy reiterated that it’s “very early days” in AI development and adoption.
Cloud rivals
Amazon Web Services continues to lead the cloud infrastructure market, but it’s facing steeper competition from Microsoft Azure and Google Cloud, which posted stronger growth rates in their latest quarterly results.
AWS grew its revenue by 18% year over year, which just beat Wall Street’s estimates. That trailed the big gains reported by Microsoft and Alphabet. The companies recorded cloud growth rates of 39% and 32%, respectively.
Analysts asked Amazon leadership on the call why its cloud business isn’t growing as quickly as its rivals.
“There is a Wall Street finance person narrative right now that AWS is falling behind in generative AI with concerns about share loss to peers, etcetera,” said Morgan Stanley analyst Brian Nowak. The firm has an overweight rating on Amazon’s stock.
Attendees walk through an exposition hall at AWS re:Invent, a conference hosted by Amazon Web Services, in Las Vegas on Dec. 3, 2024.
Noah Berger | Getty Images
JPMorgan analyst Doug Anmuth said there’s been “significantly faster cloud growth among the number two and number three players in the space.”
Jassy said sometimes the company is growing faster than rivals, and vice versa, but AWS still has a “meaningfully larger” cloud business.
“I think the second player is about 65% of the size of AWS,” he said.
Jassy also appeared to take a swipe at Microsoft over a recent worldwide attack on its SharePoint collaboration software, saying AWS customers see a “very big difference” in security.
“You could just look at what’s happened the last couple months, you can just see kind of adventures at some of these players almost every month,” Jassy said.
The comments failed to sway some investors.
Bernstein analysts said Friday that the “tone wasn’t great” and Amazon’s explanation for its competitive positioning and trajectory “sounded less constructive than peers.”
“Words matter…but numbers matter more,” the analysts wrote.
Tariff risk better than feared
In May, Amazon warned it was bracing for potential uncertainty ahead linked to President Donald Trump‘s shifting tariff and trade policies.
At the time, products imported from China were subject to a steep 145% levy. That threatened to drive up costs for Amazon vendors and its millions of third-party sellers, raising concerns of price increases and a drop-off in consumer demand.
Since then, the U.S. and China have reached a truce, with China now facing a 30% combined tariff rate.
Amazon’s latest earnings showed the company seems to be navigating the tariffs and shifting trade policies better than Wall Street had feared.
Sales in its online store topped analysts projections and grew 11% year over year, while seller services revenue also beat expectations. The number of items sold in Amazon’s online and physical stores jumped 12%, indicating that the consumer remains “healthy” despite tariffs and economic uncertainty, analysts at Citizens wrote in a Friday note to clients.
Amazon’s third-quarter sales forecast, which implies 13% growth at the high end, suggests “tariffs appear to have been effectively absorbed by suppliers, merchants and customers,” Citizens analysts wrote. They have an outperform rating on the company’s shares.
Jassy struck a positive but cautious tone on the call, saying it’s “hard to know” where the tariffs will settle, especially when it comes to China.
“We’re unsure at this point who’s going to end up absorbing those higher costs,” he said.
A deal between the U.S. and China hasn’t been finalized, and the two countries have until Aug. 12 to reach a final agreement.
So far, Amazon has been able to weather Trump’s trade war.
“We just haven’t seen diminished demand, and we haven’t seen any kind of broad scale [average selling price] increases,” Jassy said on the call. “So that could change in H2. There are a lot of things that we don’t know, but that’s what we’ve seen so far.”
People walk past an Amazon Fresh store in Washington, DC, on August 26, 2021.
Nicholas Kamm | AFP | Getty Images
Amazon plans to close all of its Fresh supermarkets in the U.K., in the latest recalibration of its grocery strategy.
The company said in a Tuesday blog that it’s preparing to close all 19 of its Fresh U.K. stores, “following a thorough evaluation of business operations and the very substantial growth opportunities in online delivery.” Five of the Fresh locations are expected to be converted into Whole Foods stores, Amazon said.
Amazon opened its first Fresh location outside the U.S. in London in 2021, about a year after it debuted the store concept in the Woodland Hills neighborhood of Los Angeles. Fresh stores offer cheaper prices and more mass-market items compared to Whole Foods, the upscale supermarket chain Amazon acquired for $13.7 billion in 2017. Many of the stores also feature Amazon’s cashierless “Just Walk Out” technology.
The Fresh store pullback in the U.K. comes as Amazon has continued to adjust its grocery ambitions. The company has slowed expansion of its Fresh grocery chain and Go cashierless stores in the U.S. It still maintains 500 Whole Foods locations and has opened mini “daily shop” Whole Foods stores in New York City.
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At the same time, Amazon CEO Andy Jassy and other company executives have touted the success of sales of “everyday essentials” within its online grocery business, which refers to items like canned goods, paper towels, dish soap and snacks.
Jassy told investors at the company’s annual shareholder meeting in May that he remains “bullish” on grocery, calling it a “significant business” for Amazon.
The company on Tuesday also said that it plans to offer same-day delivery of groceries, including perishable items, in the U.K. beginning next year.
The Chinese electric car manufacturer BYD presents its models at the Open Space Area during the IAA Mobility in Munich, Bavaria, Germany, on September 12, 2025.
Eyeswideopen | Getty Images News | Getty Images
BYD has a backup plan if it gets cut off from the Nvidia chips it currently uses in its cars, a top executive at the Chinese electric carmaker told CNBC on Tuesday.
Stella Li, executive vice president at BYD, said the company had not received any directive from the Chinese government to stop using Nvidia chips — but if it did, it has a plan B.
“Everybody has a backup. BYD has [a] backup,” Li told CNBC’s Dan Murphy.
Li declined to expand on what the plan is, but she pointed to the Covid-19 pandemic during which there was a global shortage of semiconductors which badly affected the auto sector. BYD had “no issue” at the time because it developed a lot of its technology in-house, he said, so it was able to source alternatives quickly.
Indeed, BYD has sought to have control over large parts of its supply chain, from manufacturing its own cars to developing its own batteries.
“We have a lot of strong … even deeper technology in-house, so we always have backup,” Li said.
Nvidia, whose chips underpin much of the world’s artificial intelligence development, has been caught in the crossfire amid U.S.-China tensions. The company’s H20 AI chip — designed specifically to comply with U.S. export restrictions to China — was first banned, then permitted to be sold in China this year after a revenue-share deal between Washington and Nvidia.
Nvidia designs an entirely different set of semiconductors for cars, however.
One of Nvidia’s systems, Nvidia Drive AGX Orin, is designed to enable cars to carry out some driving tasks autonomously. BYD is a customer of this product.
There is no indication so far that the Chinese government is looking to ban this Nvidia system.
Li said BYD had not been told to stop using any Nvidia products, adding it was unlikely that Beijing would ban the U.S. firm’s auto chips.
“I don’t think any country will do that, because this automatic will kill Nvidia,” Li said. “So Nvidia now is the highest market value company, so if they lose the big market from China … nobody wants to see this.”
Amazon and the Federal Trade Commission are squaring off in a long-awaited trial over whether the company duped users into paying for Prime memberships.
The lawsuit, filed by the FTC in June 2023 under the Biden administration, alleges that Amazon deceived tens of millions of customers into signing up for its Prime subscription program and sabotaged their attempts to cancel it. Amazon has denied any wrongdoing.
The trial is being held in a federal court in Seattle, Amazon’s backyard. Jury selection began Monday and opening arguments are slated for Tuesday, with the trial expected to last about a month.
Launched in 2005, Amazon’s Prime program has grown to become one of the most popular subscription services in the world, with more than 200 million members globally, and it has generated billions of dollars for the company. Membership costs $139 a year and includes perks like free shipping and access to streaming content. Data has shown that Prime members spend more and shop more often than non-Prime members.
Amazon founder and executive chairman Jeff Bezos famously said the company wanted Prime “to be such a good value, you’d be irresponsible not to be a member.”
Regulators argue that Amazon broke competition and consumer protection laws by tricking customers into subscribing to Prime. They pointed to examples like a button on its site that instructed users to complete their transaction and did not clearly state they were also agreeing to join Prime for a recurring subscription.
“Millions of consumers accidentally enrolled in Prime without knowledge or consent, but Amazon refused to fix this known problem, described internally by employees as an ‘unspoken cancer’ because clarity adjustments would lead to a drop in subscribers,” the agency wrote in a court filing last week.
The FTC says that the cancellation process is equally confusing, requiring users to navigate four webpages and choose from 15 options — a “labyrinthian mechanism” that the company referred to internally as “Iliad,” referencing Homer’s epic poem about the Trojan War.
Amazon has argued that the Prime sign up and cancellation processes are “clear and simple,” adding that the company has “always been transparent about Prime’s terms.”
“Occasional customer frustrations and mistakes are inevitable — especially for a program as popular as Amazon Prime,” the company wrote in a recent court filing. “Evidence that a small percentage of customers misunderstood Prime enrollment or cancellation does not prove that Amazon violated the law.”
A crackdown on ‘dark patterns’
The FTC notched an early win in the case last week when U.S. District Court Judge John Chun ruled Amazon and two senior executives violated the Restore Online Shoppers’ Confidence Act by gathering Prime members’ billing information before disclosing the terms of the service.
Chun also said that the two senior Amazon executives would be individually liable if a jury sides with the FTC due to the level of oversight they maintained over the Prime enrollment and cancellation process.
Amazon’s Prime boss Jamil Ghani and Neil Lindsay, a senior vice president in its health division who previously oversaw Prime’s technology and business operations, are named defendants in the complaint.
Russell Grandinetti, Amazon senior vice president of international consumer, is also named in the suit, but Chun argued he had “less involvement in the operation of the Prime organization” compared to Ghani and Lindsay.
Chun also scolded attorneys for Amazon in July for withholding thousands of documents from the FTC and abusing a legal privilege to shield them from scrutiny. Among the documents was a 2020 email where Amazon’s retail chief Doug Herrington said “subscription driving” was a “shady” practice and referred to Bezos as the company’s “chief dark arts officer.”
Representatives from Amazon didn’t immediately respond to a request for comment.
Amazon also faces a separate lawsuit brought by the FTC in 2023 accusing it of wielding an illegal monopoly. That case is set to go to trial in February 2027.
The Prime case is part of the FTC’s broader crackdown on so-called “dark patterns,” which it began examining in 2022. The phrase refers to deceptive design tactics meant to steer users toward buying products or services or giving up their privacy.
The agency brought a similar dark patterns lawsuit against Uber in April, accusing the ride-hailing and delivery company of deceptive billing and cancellation practices tied to its Uber One subscription service. Uber has disputed the FTC’s allegations.
Earlier this year, it reached settlements with online dating service Match and online education firm Chegg over claims that their subscription practices were deceptive or hard to cancel.