Amazon's Q3 Earnings: Can Layoffs and AI Fuel Sustained Growth?

Amazon.com Inc. (NASDAQ: AMZN) is poised to report third-quarter earnings on October 30, with analysts and investors closely watching for insights into the e-commerce giant's navigation of recent challenges and strategic expansions. UBS raised its price target to $279 from $271, maintaining a "Buy" rating, citing Amazon's strong momentum and projected growth in cloud computing and advertising revenue, according to Investing.com. The stock, currently trading at $230.61, has gained 1.6% year-to-date in 2025, reflecting confidence in its diversified business model despite headwinds like the recent AWS outage and corporate job cuts, a Benzinga preview noted.

The company faces scrutiny over its decision to cut up to 30,000 corporate jobs, representing 8.6% of its corporate workforce, as part of cost-cutting measures post-pandemic hiring surges, according to Seeking Alpha. Analysts suggest these cuts could streamline operations but may also raise questions about long-term workforce stability. Meanwhile, Amazon's automation and AI initiatives, including Project Rainier, are expected to bolster efficiency and investor sentiment, with Wolfe Research upgrading its operating income estimates for 2026 by 3.5%, as Investing.com reported.

Revenue growth remains a focal point. Amazon's Q3 guidance projects net sales between $174 billion and $179.5 billion, reflecting 10-13% year-over-year growth, though foreign exchange rates are expected to negatively impact results by 130 basis points, according to TradingView. International expansion, particularly in the Netherlands, underscores the company's global ambitions. A $1.6 billion investment there aims to enhance AI capabilities for sellers and expand e-commerce and AWS operations, the Benzinga preview added. This follows 16% year-over-year international revenue growth in Q2, outpacing North America's 11%, the same Benzinga preview reported.

AWS, Amazon's cloud computing division, continues to drive innovation. Recent outages, however, have highlighted vulnerabilities, prompting discussions about reliability and customer trust. AWS revenue grew 17.5% year-over-year in Q2, though slower than previous quarters, the Benzinga piece noted. UBS anticipates an 18% year-over-year growth rate for AWS in Q3, with potential acceleration in 2026 as new capacity comes online, Investing.com said. The division's performance will be critical in demonstrating Amazon's ability to maintain its leadership in the competitive cloud market against rivals like Microsoft and Google.

Amazon's e-commerce segment also shows resilience. The extended Prime Day event in July 2025, spanning four days and 26 countries, generated record sales, with U.S. e-commerce hitting $24.1 billion, according to Nasdaq. Third-party seller services, a key growth driver, are projected to contribute $41.7 billion in Q3, a 10.2% year-over-year increase, Nasdaq reported. Additionally, the launch of same-day perishable grocery delivery in over 1,000 U.S. locations—expanding to 2,300 by year-end—positions Amazon to capture a larger share of the grocery market, Nasdaq added.

Investor sentiment is further bolstered by Amazon's strategic foray into physical retail and digital advertising. The integration of AI-powered tools like Rufus and Amazon Lens is enhancing customer experience, while Prime Video's acquisition of NBA games for the 2025-2026 season strengthens its live sports content portfolio, the Benzinga preview observed. These moves aim to diversify revenue streams and counter potential saturation in core e-commerce.

As the company prepares for its Q3 earnings report, stakeholders will scrutinize its ability to balance cost reductions with innovation, navigate global geopolitical risks, and sustain growth in both established and emerging markets. With a $2.42 trillion market cap, Amazon's next steps could shape not only its own trajectory but also broader industry trends in technology and retail.