Amazon Earnings: AI, AWS, and Tariffs in Focus for Investors

Tech giant set to report Q2 results with analysts watching key growth drivers

Amazon is poised to announce its second-quarter financial results on Thursday, with Wall Street keenly awaiting updates on artificial intelligence, cloud computing, and the ongoing impact of tariffs on e-commerce operations. The tech titan’s stock has seen a modest 5% increase year-to-date, indicating investor anticipation for positive performance.

Key Growth Engines Under the Microscope

Analysts are particularly interested in the performance of Amazon Web Services (AWS), with Bank of America research analyst Justin Post highlighting it as a crucial driver for future gains. He anticipates updates on AWS capacity expansion and its contributions to revenue growth in the latter half of the year. Post also expects Amazon’s collaboration with AI startup Anthropic to significantly boost the AWS business. Bank of America recently increased its price target for Amazon to $265, signaling a potential 14% upside.

Jefferies’ senior technology research analyst, Brent Thill, has noted that the anticipated impacts of tariffs and subsequent price increases have largely not materialized, with consumer demand remaining robust. He also believes Amazon is well-positioned as a preferred platform for complex AI workloads. Jefferies has maintained its “Buy” rating on Amazon, with a price target of $265.

UBS analyst Stephen Ju views Amazon as one of the most undervalued companies within the Magnificent Seven. He suggests the stock’s valuation, which was significantly affected by tariff volatility earlier this year, is now set for a rebound as trade agreements stabilize. UBS reiterated its “Buy” rating and raised its price target to $271, indicating an 18% potential upside.

Prime Day and Tariff Strategies

While Amazon’s Prime Day sales event concluded in July, after the close of the second quarter, investors may still hear some commentary on its performance. The extended four-day sale could provide insights into consumer behavior and the effectiveness of the company’s promotional strategies.

A significant point of interest for investors will be Amazon’s latest strategies for managing tariffs, especially in light of potential price adjustments. CEO Andy Jassy previously indicated that the company’s diverse product sourcing and extensive seller network provide an advantage in offering competitive pricing. The company’s second-quarter guidance was slightly below analyst expectations, partly due to uncertainty surrounding tariffs. With new trade negotiations on the horizon, an update on this front is highly anticipated.

Financial Projections and Estimates

Wall Street consensus forecasts Amazon’s second-quarter net sales to reach approximately $162.15 billion, with earnings per share (EPS) projected at $1.33. Key segments like AWS are expected to contribute significantly, with net sales estimated at $30.77 billion. For the third quarter, net sales are predicted to rise to $173.25 billion.