Amazon(US:AMZN) Zhi Tong Cai Jing·2025-10-27 08:01Core Viewpoint - Amazon is set to release its Q3 earnings on October 30, with expectations of $177.8 billion in revenue, adjusted EPS of $1.98, operating income of $19.8 billion, and a gross margin of 50% [1] Performance Review - In Q2, Amazon reported total revenue of $167.7 billion, exceeding market expectations of $162.09 billion, with EPS of $1.68, surpassing the forecast of $1.33 [2] - E-commerce sales accounted for two-thirds of total sales, with online store and third-party seller sales both growing by 11% [2] - Amazon expanded its same-day and next-day delivery services to 4,000 small areas and added new brand partnerships, including Estée Lauder's Origins and a dedicated Nike store [2] - The average transportation distance for packages decreased by 12%, and the order volume from fulfillment centers to delivery stages increased by 40% [2] - CEO Andy Jassy acknowledged uncertainties due to tariff policies while highlighting improvements in distribution efficiency [2] AWS and Advertising Performance - AWS revenue grew by 17.5% year-over-year to $30.9 billion, while advertising revenue increased by 23% to $15.69 billion [3] - Despite AWS's leadership in the cloud infrastructure market, concerns about its growth rate compared to competitors have led to a negative perception in the AI sector [3] - AWS's operating margin for Q2 was 32.9%, expected to rise to 34.2% in Q3, although still below earlier levels of over 35% [5] - Analysts predict Q3 AWS revenue to reach $32.4 billion with operating income of $11.1 billion [5] Investment Outlook - Analysts remain focused on AWS, with expectations for a rebound in growth and profitability, particularly as capital expenditures are projected to reach $118 billion in 2025 [4][6] - Market sentiment towards AWS is cautious, but improvements in order backlog and capital spending are seen as positive indicators [6][7] - Amazon's stock has underperformed compared to peers, but analysts believe it presents a buying opportunity due to its cloud business growth potential [7] - The company plans to replace 600,000 jobs with robots by 2033, which could enhance operational profit margins [8] - The advertising business is also expected to show strong growth, with potential to exceed AWS in both growth rate and profitability [8]