Amazon failed to quiet concerns over how Donald Trump’s sweeping tariffs would affect its e-commerce business as it reported its latest quarterly results Thursday. Wall Street’s affinity for the tech giant faltered in response.
The top line numbers from Amazon’s second quarter earnings report exceeded Wall Street’s projections. The tech company beat expectations with its revenue up 13.3% year over year to $167.7bn. Market experts had estimated the company would report around $162bn in revenue and 9% percent growth. The company’s Amazon Web Services cloud computing division reported its sales reached $30.9bn in an increase of 17.5% year over year.
However, the company may not meet expectations on its operating income, reporting that it would bring in between $15.5bn and $20.5bn compared with expectations of about $19.4bn.
Despite the generally positive revenue numbers, Amazon’s share price fell over 3% in after hours trading, a sign investors lacked confidence in the company’s immediate future.
Amazon’s stock was up about 6% so far this year prior to Thursday’s earnings call, following a rough first quarter that saw a decline due to uncertainty around how Trump’s tariffs would hurt its reliance on international sellers. The administration also criticized Amazon in April following a report that the company planned to itemize tariff-related price increases on its platform. No such itemization appeared on Amazon’s marketplace.
Amazon’s earnings come as the company is engaged in big tech’s fevered spending race to dominate the artificial intelligence market. Companies including Google, Meta and Microsoft are pledging to spend tens of billions to advance the technology, while Amazon announced it would spend $100bn in 2025 with the “vast majority” of that going towards enhancing its AI capabilities.
The company’s CEO Andy Jassy touted Amazon’s AI investments in an earnings press release, claiming that it had deeply integrated AI services into many of its products and operations.
“Our AI progress across the board continues to improve our customer experiences, speed of innovation, operational efficiency, and business growth, and I’m excited for what lies ahead,” Jassy said.
Amazon has invested billions of dollars into massive data centers to power its Amazon Web Services cloud business and expand its use of generative AI. In June, it announced a plan to spend $20bn building two facilities in Pennsylvania. Governor Josh Shapiro described it as the largest private sector investment in the state’s history. Another Amazon facility in Indiana, the company’s biggest yet, stretches over 1,200 acres of land and is set to host at least 30 data centers.
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The e-commerce giant has partnered with Anthropic, one of the biggest artificial intelligence startups to emerge from the recent boom, to increase its stature in the AI world and integrate the technology into its variety of services. Amazon has already invested $8bn in the AI company and may make another multibillion dollar investment soon, according to a Financial Times report from this month.
Amazon also struck a deal earlier this year with the New York Times to use some of their content for AI training purposes or for generating summaries with its products like Alexa, with the Wall Street Journal reporting this week that the tech company would pay between $20m and $25m a year for the licensing rights.