Amazon shoppers have been fighting their recession fears and chasing deals on the e-commerce giant’s marketplace. Wall Street, though, is nervous about the rest of the year.
Sales figures released Thursday by the company show its customers kept spending between April and June, driving up both revenue and profit for the Seattle-headquartered company. But analysts and investors latched onto a gloomy profit forecast in the coming quarter.
Amazon reported it brought in $167.7 billion in revenue with $18.2 billion in profit during its second quarter, which ran from April through the end of June.
The figures thoroughly beat estimates from analysts on Wall Street, who expected $162 billion in revenue. The results also showed stronger revenue growth compared to the same quarter last year, as sales in North America and internationally surged.
But Wall Street is fickle. Amazon’s forecast for the third quarter, which ends Sept. 30, provided an operating income range with a floor below what analysts were expecting. The company’s share price slid more than 6% in after-hours trading Thursday.
Extended trading is available for a few hours after the market closes and again before the market opens, allowing traders to respond to news outside of regular hours.
Amazon provided a conservative financial forecast during its previous earnings report in May as well. With shifting tariff policies affecting many companies that sell products on its platform, CEO Andy Jassy mentioned the uncertainty in May and the company added tariff and trade policies to the lists of risks in its financial guidance.
In a call with analysts on Thursday, Jassy repeated statements from May, saying that it’s difficult to know how tariffs will affect the business since policies keep changing.
“What we’ve said a number of times is that we just don’t know what’s going to happen moving forward,” Jassy said. “Particularly in China.”
Tariffs on Chinese imports are paused until Aug. 12.
Jassy told analysts that Amazon hasn’t seen any diminished demand and that it’s hard to know what will happen when it depletes pre-tariff inventory. He said any reports that implied tariff-related costs were passed onto customers were incorrect.
“If costs end up being higher, we’ll absorb them,” Jassy said.
Again repeating a point from last quarter, Jassy said that Amazon’s relatively low pricing could insulate it from economic uncertainty. If other retailers are raising prices, consumers will flock to Amazon for deals.
On the cloud-computing side of Amazon’s business, the costs of the artificial intelligence race are hampering profit. The company reported $20.7 billion in operating income for Amazon Web Services, reflecting 9% growth from last year. But the cloud division’s profitability, or operating margin, is getting lower.
Costs are rising for tech giants as they push more investments into AI.
Chief Financial Officer Brian Olsavsky said part of the reason for a lower operating margin in AWS was capital expenditures in AI and cloud infrastructure. Amazon plans to spend more than $100 million on investments this year, much of it going toward AI.
Amazon’s peers are investing heavily as well. Microsoft spent over $88 billion investing in its AI infrastructure last year and is planning another $30 billion by the end of September.
Cloud computing is still showing growth for Amazon. The division reported $30.8 billion in revenue, beating Wall Street’s estimates and growing by 18% year-over-year.
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