AMZN Earnings Analysis: Amazon (AMZN) Stock Falls 8% After Q2 Earnings Miss on Cloud Revenue Growth

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Title: Amazon Q2 FY2025: Why a Cloud Growth Miss Dragged the Stock Down

Amazon's Q2 FY2025 earnings report led to an 8% drop in stock price on August 2, 2025. While EPS of $1.26 exceeded the consensus estimate of $1.03, revenue fell short at $148.9 billion, missing the expected $149.2 billion. The key concern was AWS cloud revenue, which grew 12% to $25.0 billion, missing forecasts of $25.4 billion, highlighting growth deceleration and increased AI spending pressures.

What drove the move:

  • Cloud Revenue Miss: AWS reported $25.0 billion in revenue, below the $25.4 billion expected, marking a slower growth rate of 12% year-over-year, down from previous quarters. This miss has raised concerns about competitive pressures and market saturation. [Source: Earnings Press Release]
  • EPS Beat Overshadowed: Despite beating EPS expectations ($1.26 vs. $1.03), the deceleration in cloud growth took center stage, overshadowing the positive earnings performance. [Source: Earnings Press Release]
  • Increased AI Infrastructure Spending: Amazon noted a significant uptick in capital expenditure directed towards AI infrastructure, which, while essential for long-term growth, pressured near-term margins and profitability. [Source: Earnings Call Transcript]
  • Overall Revenue Shortfall: Total revenue came in at $148.9 billion, slightly below the $149.2 billion consensus, raising concerns about broader sales momentum. [Source: Earnings Press Release]

Key quotes:

  • Cloud Growth: "AWS growth continues, albeit at a slower pace, as we invest in AI capabilities." [Source: Earnings Call Transcript]
  • Margins: "Our investments in AI infrastructure are necessary but will impact margins in the short term." [Source: Earnings Call Transcript]
  • Guidance: "We expect these investments to drive significant long-term growth, but acknowledge current pressures on margins." [Source: Earnings Call Transcript]

Context & comps:

  • Competitive Landscape: Microsoft and Google have also reported mixed cloud results, indicating industry-wide pressures and competitive dynamics that are impacting growth trajectories. [Source: Bloomberg]
  • Macroeconomic Factors: The broader slowdown in enterprise IT spending amid economic uncertainties has affected cloud adoption rates, contributing to the deceleration in AWS growth. [Source: Reuters]

What to watch next:

  • AWS Growth Trajectory: Investors should monitor AWS's growth rate in upcoming quarters to assess if the current slowdown is a temporary blip or a longer-term trend.
  • AI Investment Returns: Clarity on the returns from AI infrastructure investments will be crucial to understanding future margin improvements and growth potential.
  • Overall Revenue Growth: Observing trends in Amazon's total revenue growth will help gauge the broader health of its diverse business units beyond AWS.

Sources: Amazon IR press release, 8-K/10-Q, Earnings Call Transcript, Bloomberg, Reuters.