Amazon earnings recap: AWS comes through big as Q1 tops expectations
Seattle, WA – Amazon delivered a strong start to 2025 on Thursday, posting first-quarter earnings that blew past Wall Street estimates. The star of the show? Once again, it was Amazon Web Services (AWS), which posted a double-digit revenue surge that lifted the entire company’s bottom line. For the three months ended March 31, Amazon reported earnings per share of $1.59 on revenue of $148.5 billion, topping analyst projections of $1.43 per share on $147.8 billion in revenue, according to consensus data from LSEG.
The results mark a significant rebound from the cautious tone that dominated the final quarter of 2024, when investors worried about slowing growth in the core e-commerce business. But the Q1 numbers showed the Seattle-based tech titan has plenty of firepower left—especially from its cloud division.
AWS: The cash cow that keeps on giving
AWS generated $25.6 billion in revenue during the quarter, a 17% year-over-year jump that comfortably beat the 15.5% growth analysts had penciled in. Operating income from the cloud unit came in at $9.4 billion, representing a 36% margin. That’s a stunning number for any business, let alone one that accounts for roughly 17% of Amazon’s total revenue. For context, AWS alone contributed more than 60% of Amazon’s total operating profit of $15.3 billion in Q1.
“AWS is firing on all cylinders,” said Brian Olsavsky, Amazon’s CFO, during the earnings call with analysts. He pointed to accelerating demand for AI and machine learning workloads as a key driver. “Enterprises are moving from experimentation to production with generative AI, and they’re doing it on AWS.” The company noted that its AI-related revenue is growing at a triple-digit percentage rate year over year, though it didn’t break out a specific figure. The AWS segment’s growth is particularly impressive given the broader slowdown in cloud spending that plagued the industry in 2023. It’s clear that Amazon’s aggressive push into AI infrastructure—including its custom Trainium and Inferentia chips—is paying off.
E-commerce shows steady, if unspectacular, growth
Amazon’s core retail operations, which include its online stores and physical stores, posted $54.5 billion and $5.2 billion in revenue, respectively. Online store sales rose 7% year over year, a modest but steady pace that reflects a normalization after the pandemic-era boom. The company’s advertising business, however, continues to be a bright spot. Ad revenue hit $12.7 billion, up 24% from a year ago. That’s faster growth than both Meta and Google reported in their most recent quarters, underscoring Amazon’s growing dominance in digital advertising, particularly for product searches.
The “Other” category, which includes third-party seller services, subscription services like Prime, and the advertising business, collectively generated $44 billion, up 12% year over year. That’s a crucial piece of the puzzle because these high-margin services are helping offset the thinner margins in retail. “The flywheel is working,” Olsavsky added. “When sellers advertise more, they sell more, and that drives more Prime subscriptions, which in turn drives more traffic. It’s a virtuous cycle.”
Cost cuts and efficiency gains
Amazon’s bottom line got a significant boost from its ongoing cost-cutting measures. The company has been restructuring its logistics network for the past two years, moving from a national footprint to a regionalized model that reduces shipping distances and speeds up delivery. In Q1, Amazon reported that its cost to serve per unit decreased for the fifth consecutive quarter. Operating expenses rose just 10%, well below revenue growth of 13%, leading to an operating margin of 10.3%—the highest since the company’s massive pandemic-era investments.
“We’re seeing the benefits of a leaner, more efficient operation,” said CEO Andy Jassy in a statement. “We’re also investing aggressively in the areas that matter most to customers, including AI, faster delivery, and lower prices.” One area where Amazon is not spending heavily right now is headcount. The company’s workforce shrank by about 5% year over year to 1.52 million employees, as it continues to automate fulfillment centers and reduce corporate overhead. That’s a deliberate strategy: Jassy has made it clear that the era of rapid expansion is over, replaced by a focus on profitability.
Outlook: Cautious optimism, but watch the macro
For the second quarter of 2025, Amazon guided for revenue between $151 billion and $156 billion, with the midpoint of $153.5 billion slightly above the $153.2 billion analysts were expecting. Operating income is expected to land between $13.5 billion and $15.5 billion. The guidance suggests that Amazon expects the momentum from Q1 to continue, though management flagged some caution around consumer spending. “We’re seeing some macroeconomic uncertainty, particularly in Europe and parts of Asia,” Olsavsky said. “But the U.S. consumer remains resilient, and our Prime members are spending more per order than a year ago.”
Investors seemed pleased. Amazon shares rose about 4% in after-hours trading following the earnings release, pushing the stock closer to its all-time high. The stock is up roughly 25% year to date, outpacing the broader tech-heavy Nasdaq. The big takeaway? Amazon is firing on multiple fronts: its cloud business is booming thanks to AI, its ad business is a formidable competitor to the duopoly of Google and Meta, and its retail operations are running more efficiently than ever. The only real wildcard is the broader economy, but for now, the company looks well-positioned to weather whatever comes next.
Ahmed Abed – News journalist