Amazon delivered strong second quarter results that blew past Wall Street expectations. The company’s cloud computing unit experienced a big jump, with revenue increasing 18% year over year to $30.87 billion. Amazon’s advertising revenue soared 23% to $15.69 billion, outpacing StreetAccount estimates of $14.99 billion.
In light of these good signs, Amazon’s first quarter guidance for operating income has set off alarm bells. The company expects an operating income of $15.5 billion to $20.5 billion for the ongoing quarter. It’s a rather conservative projection, many analysts have said. Shares dropped over 3% in extended trading on Thursday after the company released its second-quarter results.
As evidenced by Amazon’s careful guidance, challenges persist. They called out “recessionary fears” and “tariff and trade policies” as top problems for two straight quarters. These factors are expected to influence the tech giant’s performance moving forward, particularly in light of President Donald Trump’s shifting trade policies that could impact Amazon’s core retail business.
Not surprisingly, with those challenges stacked up consumer spending has shown incredible resiliency, which could award the company some wiggle room. Analysts were expecting $19.48 billion in revenue for that second quarter — an indicator of just how far ahead of expectations Amazon really was.
In a decidedly bullish note, Amazon CEO Andy Jassy touted Amazon’s own, far-reaching progress on the artificial intelligence front.
“Our AI progress across the board continues to improve our customer experiences, speed of innovation, operational efficiency, and business growth, and I’m excited for what lies ahead,” – Amazon CEO Andy Jassy
Amazon has committed to investing up to $100 billion this year in AI development, underscoring its commitment to enhancing its services and operational capabilities.