Amazon's Q2 results show strong corporate performance, but revenue growth at AWS falls short.

Stifel lowered Amazon's price target to $260 from $262 and maintained a Buy rating. The firm's Q2 results were "very healthy," but Q3 guidance was "mixed." Revenue exceeded expectations, but operating income was lighter-than-expected. The analyst notes stable revenue growth at AWS was a disappointment after heightened expectations.

Amazon (AMZN) reported robust second-quarter (Q2) earnings, exceeding Wall Street expectations, but the company's third-quarter (Q3) guidance failed to meet market expectations, causing shares to fall. The e-commerce giant reported net income of $18.16 billion, a 21% increase from the same period last year, and revenue of $167.7 billion, up 13% year-over-year [1]. The company's cloud computing arm, Amazon Web Services (AWS), grew 17.5% in the quarter, contributing significantly to the earnings [1].

However, the market reaction was mixed. While the company's revenue and earnings per share (EPS) topped analyst estimates, the Q3 operating income guidance of $15.5 billion to $20.5 billion fell short of expectations of $19.5 billion, leading to a 7% drop in shares after the announcement [1]. The company attributed the lighter-than-expected guidance to trade uncertainty and potential tariff-related price pressures [1].

Stifel, a financial services firm, lowered its price target for Amazon from $262 to $260, maintaining a Buy rating. The firm noted that while the Q2 results were "very healthy," the Q3 guidance was "mixed" [2]. The analyst cited stable revenue growth at AWS as a disappointment after heightened expectations [2].

Amazon's Q2 results do not include sales from its Prime Day event, which ran from July 8 to 11 this year. The company expects these sales to reflect in the third quarter, where it forecasts net sales between $174 billion and $179.5 billion, above analyst projections of $173.27 billion [1].

Amazon is investing heavily in artificial intelligence (AI) and data infrastructure. The company is expanding its network of data centers, developing its own AI chips, and using Nvidia's technology to power various services [1]. AWS continues to lead the cloud infrastructure market, but it faces heightened competition from Microsoft and Google, which recorded growth rates of 39% and 32%, respectively, in the latest period [1].

Amazon's advertising business also performed well, with ad revenue growing 23% year-over-year to $15.7 billion in the second quarter, beating StreetAccount estimates of $14.9 billion [3]. The company's online stores unit grew 11% year-over-year to $61.5 billion during the quarter, topping Wall Street's projected $59 billion [3].

Amazon expects operating income to land between $15.5 billion and $20.5 billion in the current quarter, while analysts were looking for $19.48 billion [3]. The company's revenue in the third quarter is forecast to be $174 billion to $179.5 billion, representing growth of 10% to 13% year-over-year [3].

References:
[1] https://timesofindia.indiatimes.com/business/international-business/amazon-q2-results-american-multinational-posts-18-16-billion-net-earnings-trump-tariffs-cast-shadow-for-q3/articleshow/123038117.cms
[2] https://finance.yahoo.com/news/amazon-q2-earnings-come-in-above-wall-street-expectations-provides-better-than-expected-q3-guidance-172501211.html
[3] https://www.cnbc.com/2025/07/31/amazon-amzn-q2-earnings-report-2025.html