Amazon's Q2 Earnings Report: Strong Retail Performance, Tariffs Not Yet Affecting Prices

Amazon's stock dropped 8% despite beating earnings expectations, due to concerns about operating income for Q3 and a higher-than-expected $32.2bn spend on AI infrastructure in Q2. CEO Andy Jassy said the retail operation remains strong and touted the success of Amazon's online perishables sales business, but noted that tariffs have not yet driven price hikes or diminishing demand.

Amazon's stock experienced an 8% decline on Thursday, despite the company beating earnings expectations for the second quarter. The drop in stock value was attributed to concerns about Amazon's projected operating income for the third quarter and a higher-than-expected expenditure on AI infrastructure in the second quarter.

The company reported earnings of $1.68 per share on revenue of $167.7 billion, surpassing analyst estimates of $1.33 per share on revenue of $162.17 billion. Amazon's cloud computing and online retail businesses also performed well, with the company projecting revenue of $174 billion to $179.5 billion for the third quarter, which exceeded analyst consensus estimates of $172.9 billion.

CEO Andy Jassy highlighted the strength of Amazon's retail operations and the success of its online perishables sales business. He noted that 75% of customers who used the service this year were first-time shoppers, and 20% of those customers returned multiple times within the first month. Jassy also mentioned that this year's Prime Day sale was the largest ever, running from July 8-10.

Regarding the impact of Trump administration tariffs on the business, Jassy stated that Amazon has not yet seen diminishing demand or price hikes. He added that the future is uncertain, and the company is closely monitoring the situation.

Despite the stock dip, Amazon exceeded expectations on several metrics, including a 7% year-over-year growth in its physical store sales, which returned $5.6 billion for the quarter. The company's net sales jumped 13% year over year to $167.7 billion in Q2.

References:
[1] https://finance.yahoo.com/news/live/earnings-live-amazon-stock-slides-with-results-from-palantir-mcdonalds-disney-and-uber-up-ahead-210426336.html
[2] https://finance.yahoo.com/news/amazon-ceo-tariffs-not-yet-180309084.html