Amazon posted a solid first quarter, but the market is still buzzing over Microsoft's explosive Azure growth. During the earnings call, CEO Andy Jassy emphasized how early it still is for AI, likening the current phase to "not even the second strike of the first batter in the first inning.” Translation: AWS’s AI business is already generating multibillion dollar run rates with triple-digit growth, but it's just getting started
AI Leads the Story and the Spend
Amazon is going all in on AI infrastructure, committing $100 billion in CapEx for FY25. Most of that is headed straight for AI compute.the bottleneck isn’t demand it’s supply. AWS is scaling fast, but hardware constraints remain.
Tariffs, FX, and Satellites
Beyond AI, macro pressures loom. Tariffs, FX headwinds, and growing Kuiper satellite costs could challenge margins. Project Kuiper, Amazon’s answer to Starlink, is advancing but behind schedule, and with 2026 regulatory deadlines approaching fast.
At a Glance: Q1 Highlights
Total Revenue: $155.7B (+9% Y/Y), beat by \$600M.
EPS: $1.59, beat by \$0.23.
Gross Margin: 51% (+1pp Y/Y).
Operating Margin: 12% (+1pp Y/Y), driven by AWS’s 39% margin.
Segment Breakdown
🛒 Online Stores (37%): +5% Y/Y
🏪 Physical Stores (4%): +6% Y/Y
🚚 3P Services (23%): +6% Y/Y
📢 Ads (8%): +18% Y/Y
🔁 Subscriptions (9%): +9% Y/Y
☁️ AWS (19%): +17% Y/Y
Cash Flow
Operating cash flow (TTM): $114 B (+15%)
Free cash flow: $ 26 B (-48%), due to surging CapEx
Balance Sheet
Cash: $ 95B
Long Term Debt: $53B
Q2 Guidance
Revenue growth of +7–11% Y/Y
Operating income: $ 17.5B (Street was looking for $ 17.8B)
Currency + Leap Year Skewed the Numbers
FX and calendar quirks shaved ~$1.4B off the top line. Excluding those, revenue was up 10% Y/Y.
Tariffs Could Reshape the Marketplace Model
Management flagged potential pull-forward demand as consumers brace for higher prices. Over half of Amazon’s sellers are China-based, and tariffs could thin product selection and squeeze third-party sellers—impacting ad and fulfillment margins too.
3P Seller Growth Slowing
Third-party revenue growth of +6% Y/Y was the slowest in years. Rising costs and uncertainty are hitting SMB sellers—dragging down adjacent ad revenue growth despite its +18% print.
AWS Steady, But Lags Azure
AWS grew 17% Y/Y, solid but slower than Azure’s 33%. Margins hit 39%, partly due to a change in server depreciation assumptions. Capacity remains tight, but relief is expected later this year.
CapEx Explosion
Amazon is outspending Big Tech peers on CapEx—driven by AI buildout. Long term, this could fuel AWS growth; short term, it pressures FCF and adds margin volatility.
Tariff Risk Rising
Categories are seeing price hikes up to 30%.
Amazon may shield customers temporarily, but it can’t hold the line forever.
Politically, the idea of showing tariff costs at checkout backfired fast, with Amazon walking it back after backlash from the White House and even Trump directly.
AWS vs Azure vs. Google Cloud
Global cloud spend rose 23% Y/Y in Q1 to $94B
AWS held 29% share but lost 1pp to Azure
Azure grew 33%, Google Cloud 28%, AWS 17%
AWS margins improved, but mostly due to accounting not pricing power
Stack: Amazon’s 3 Layer Strategy
Infrastructure
Trainium 2 is Amazon’s in house chip, now at scale.
Superclusters (Project Rainier) are in development with Anthropic.
Goal: Cut inference costs to speed adoption.
Models
Bedrock added Claude 3.7, Llama 4, DeepSeek, Mistral.
Nova Premier and Nova Sonic (Amazon’s in house models) are gaining traction
Nova Act targets complex, browser-based task automation
Applications
Amazon Q enables generative coding workflows
Alexa+ now supports multi step commands
GenAI touches everything from ads to fulfillment
Project Kuiper: Progress, but Tight Deadlines
Only a few dozen satellites built; needs 1,600 by mid-2026.
First launch of 27 satellites just occurred 80+ more launches to go.
Regulatory pressure is real; failure could mean lost licenses.
Prime: More Than Just Free Shipping
Prime Video now on default ad-tier, boosting monetization
Prime Video held 3.5% of US TV time in March (half of Netflix)
Channels (e.g., Apple TV+ via Amazon) are a major growth lever
Amazon's core business is steady, AI is scaling, and the CapEx firehose is fully open. But macro threats (tariffs, FX, political noise) could cap near-term upside. The company is betting that AI and infrastructure investments pay off by H2 — but for now, Microsoft’s Azure is setting the pace.
AI Leads the Story and the Spend
Amazon is going all in on AI infrastructure, committing $100 billion in CapEx for FY25. Most of that is headed straight for AI compute.the bottleneck isn’t demand it’s supply. AWS is scaling fast, but hardware constraints remain.
Tariffs, FX, and Satellites
Beyond AI, macro pressures loom. Tariffs, FX headwinds, and growing Kuiper satellite costs could challenge margins. Project Kuiper, Amazon’s answer to Starlink, is advancing but behind schedule, and with 2026 regulatory deadlines approaching fast.
At a Glance: Q1 Highlights
Total Revenue: $155.7B (+9% Y/Y), beat by \$600M.
EPS: $1.59, beat by \$0.23.
Gross Margin: 51% (+1pp Y/Y).
Operating Margin: 12% (+1pp Y/Y), driven by AWS’s 39% margin.
Segment Breakdown
🛒 Online Stores (37%): +5% Y/Y
🏪 Physical Stores (4%): +6% Y/Y
🚚 3P Services (23%): +6% Y/Y
📢 Ads (8%): +18% Y/Y
🔁 Subscriptions (9%): +9% Y/Y
☁️ AWS (19%): +17% Y/Y
Cash Flow
Operating cash flow (TTM): $114 B (+15%)
Free cash flow: $ 26 B (-48%), due to surging CapEx
Balance Sheet
Cash: $ 95B
Long Term Debt: $53B
Q2 Guidance
Revenue growth of +7–11% Y/Y
Operating income: $ 17.5B (Street was looking for $ 17.8B)
Currency + Leap Year Skewed the Numbers
FX and calendar quirks shaved ~$1.4B off the top line. Excluding those, revenue was up 10% Y/Y.
Tariffs Could Reshape the Marketplace Model
Management flagged potential pull-forward demand as consumers brace for higher prices. Over half of Amazon’s sellers are China-based, and tariffs could thin product selection and squeeze third-party sellers—impacting ad and fulfillment margins too.
3P Seller Growth Slowing
Third-party revenue growth of +6% Y/Y was the slowest in years. Rising costs and uncertainty are hitting SMB sellers—dragging down adjacent ad revenue growth despite its +18% print.
AWS Steady, But Lags Azure
AWS grew 17% Y/Y, solid but slower than Azure’s 33%. Margins hit 39%, partly due to a change in server depreciation assumptions. Capacity remains tight, but relief is expected later this year.
CapEx Explosion
Amazon is outspending Big Tech peers on CapEx—driven by AI buildout. Long term, this could fuel AWS growth; short term, it pressures FCF and adds margin volatility.
Tariff Risk Rising
Categories are seeing price hikes up to 30%.
Amazon may shield customers temporarily, but it can’t hold the line forever.
Politically, the idea of showing tariff costs at checkout backfired fast, with Amazon walking it back after backlash from the White House and even Trump directly.
AWS vs Azure vs. Google Cloud
Global cloud spend rose 23% Y/Y in Q1 to $94B
AWS held 29% share but lost 1pp to Azure
Azure grew 33%, Google Cloud 28%, AWS 17%
AWS margins improved, but mostly due to accounting not pricing power
Stack: Amazon’s 3 Layer Strategy
Infrastructure
Trainium 2 is Amazon’s in house chip, now at scale.
Superclusters (Project Rainier) are in development with Anthropic.
Goal: Cut inference costs to speed adoption.
Models
Bedrock added Claude 3.7, Llama 4, DeepSeek, Mistral.
Nova Premier and Nova Sonic (Amazon’s in house models) are gaining traction
Nova Act targets complex, browser-based task automation
Applications
Amazon Q enables generative coding workflows
Alexa+ now supports multi step commands
GenAI touches everything from ads to fulfillment
Project Kuiper: Progress, but Tight Deadlines
Only a few dozen satellites built; needs 1,600 by mid-2026.
First launch of 27 satellites just occurred 80+ more launches to go.
Regulatory pressure is real; failure could mean lost licenses.
Prime: More Than Just Free Shipping
Prime Video now on default ad-tier, boosting monetization
Prime Video held 3.5% of US TV time in March (half of Netflix)
Channels (e.g., Apple TV+ via Amazon) are a major growth lever
Amazon's core business is steady, AI is scaling, and the CapEx firehose is fully open. But macro threats (tariffs, FX, political noise) could cap near-term upside. The company is betting that AI and infrastructure investments pay off by H2 — but for now, Microsoft’s Azure is setting the pace.
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🟣MasterClass moonypto.com/masterclass
🟢Signal moonypto.com/signal
🔵News t.me/moonypto
⚪ t.me/moonyptofarsi
🟢Signal moonypto.com/signal
🔵News t.me/moonypto
⚪ t.me/moonyptofarsi
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.