Amazon(US:AMZN) Zhi Tong Cai Jing·2025-08-01 00:27Core Viewpoint - Amazon's Q2 earnings report showed strong revenue growth but disappointing guidance for Q3, leading to a decline in stock price as investors question the effectiveness of its significant investments in artificial intelligence [2][11][13]. Revenue and Earnings - Amazon's total revenue for Q2 increased by 13% to $167.7 billion, surpassing market expectations of $162.1 billion. Earnings per share were $1.68, exceeding the anticipated $1.33 [2]. - The revenue from Amazon Web Services (AWS) grew slightly over 17% to $30.9 billion, just above the analyst average expectation of $30.8 billion [3]. - The advertising business generated $15.7 billion in Q2, a 23% year-over-year increase, exceeding market expectations of $14.9 billion [5]. - Online store revenue rose by 11% to $61.5 billion, surpassing the market average expectation of $59 billion. Seller services revenue reached $40.3 billion, also up 11% [7]. Regional Performance - North America revenue grew by 11% to $100.1 billion, while international revenue increased by 16.2% to $36.8 billion [9]. Future Outlook - For Q3, Amazon expects operating profit to be between $15.5 billion and $20.5 billion, with sales projected between $174 billion and $179.5 billion, both above analyst expectations [11]. - CEO Andy Jassy emphasized the need for significant investment in data centers to compete in the AI infrastructure race against Microsoft and Alphabet [11]. Capital Expenditure and Competition - Amazon's capital expenditures reached a record $31.4 billion in Q2, a 90% increase year-over-year, indicating substantial investment plans for the second half of the year [12]. - Analysts expressed disappointment with AWS's growth compared to competitors, with Microsoft Azure and Google Cloud reporting growth rates of 39% and 32%, respectively [12]. - Jassy noted that AWS's growth is still in the early stages and highlighted the importance of security and availability as competitive advantages [12][13]. Stock Market Reaction - Following the earnings report, Amazon's stock price fell significantly, dropping nearly 8% in after-hours trading, reflecting investor concerns about the company's future performance [13].