Amazon's Data Center Expansion Under Scrutiny Amid Community Resistance

Amazon.com is a global leader in online retail, operating a marketplace for individuals and companies to buy and sell goods and services. The company offers a range of products, including electronics, cultural products, and more. Net sales are primarily generated from services (52.7%) and products (47.3%), with the majority coming from the US (69.3%).

Amazon.com (NASDAQ:AMZN) reported robust earnings for the second quarter of 2025, with net sales reaching $167.7 billion, up 13.3% year-over-year, and exceeding analyst expectations by $5.6 billion [1]. The company's performance was driven by strong growth in its North America, International, and Amazon Web Services (AWS) segments. Net sales from North America grew 11.1% year-over-year to $100.1 billion, supported by accelerating advertising sales and increased Prime engagement. International sales surged 16.1% to $36.8 billion, while AWS revenue jumped 17.5% to $30.9 billion, reinforcing its position as the most profitable driver of Amazon’s business model.

Amazon's earnings momentum was further bolstered by a significant increase in diluted EPS, which rose 35.5% to $1.68, well ahead of expectations. This performance pushed net margins above 10.8% compared to 9.1% last year. The company's strong financial performance was reflected in its operating cash flow, which climbed to $121.1 billion for the trailing twelve months, and free cash flow of $18.2 billion after substantial capital expenditures in data centers and logistics.

Amazon's retail dominance continued to be a key factor in its growth. The company's market share in U.S. retail e-commerce remains nearly 38%, significantly higher than Walmart's 6.3%. Prime Day results in July 2025 generated Amazon’s highest-ever sales and subscriptions in a single event, underscoring the strength of its subscription-based model. The introduction of premium brands like Nike, Aveda, and Marc Jacobs signals a push into higher-margin retail categories.

AWS, Amazon's cloud computing division, remains a significant growth driver. The AWS backlog reached $195 billion in Q2 2025, up 25% year-over-year, reflecting long-term contracts from enterprise clients and surging AI workloads. Operating margins in AWS expanded to 36.8%, contributing 52.9% of overall operating profits. Despite competition from neoclouds such as CoreWeave, AWS maintains scale advantages and remains central to global IT’s migration from on-premise to the cloud.

Amazon's strong financial position is reflected in its balance sheet, which remains robust with $93.1 billion in total cash and $159.6 billion in debt, supporting its AA credit rating. Insider transactions show selective selling into strength, but institutional ownership at 66% reinforces confidence in long-term appreciation.

Shares of NASDAQ:AMZN closed at $229 on August 29, 2025, down 1.12% on the day and 5.6% below their February 2025 peak of $242. The stock trades at a forward P/E of 34.6x and a price-to-sales ratio of 3.68. Despite these metrics, Amazon's projected operating cash flow growth of 21–24% annually through 2027 supports a fair value closer to $324 per share, implying a 29% discount and potential 45% upside over the next 12 months. Long-term analyst estimates suggest EPS could reach $9.22 by 2027, with revenues exceeding $779 billion in 2026, underscoring the case for re-rating.

However, Amazon faces regulatory, cyber, and macroeconomic risks. Its outsized retail dominance invites antitrust challenges, and its vast data infrastructure makes it a high-value target for cyber breaches. Macro sensitivity remains a factor, with recession odds for 2025 currently at 10%.

Despite conservative Q3 guidance of $176.7 billion in revenue and $18 billion in operating income, Amazon has a track record of outperforming its own forecasts, beating consensus in 10 of the past 11 quarters. Shares are consolidating in the $220–230 range, near their 50-day moving average of $224. Technical support sits at $200, with resistance at $242. A breakout above $242 could open the path to $260–$280, in line with top analyst targets, while pullbacks to $200 provide attractive entry points for long-term investors.

References:
[1] https://www.tradingnews.com/news/amazon-stock-price-forecast-nasdaq-amzn-cloud-momentum-price-growth