Amazon Q2 earnings outperformed analyst expectations, but a strong performance wasn’t enough to quell market fears in light of a gloomy forecast and Amazon Web Services growth seen as anemic, at +17.5 percent, which was slower than the expansion of its competitors Microsoft Azure (+39 percent) and Google Cloud (+32 percent). Amazon’s Q2 profit was $18.2 billion, up nearly 30 percent on revenue of $167.7 billion, a 13 percent gain year-over-year. Advertising income of $15.7 billion was almost $1 billion more than StreetAccount’s estimate of $14.9 billion. But for the current quarter, Amazon estimated operating income between $15.5 billion and $20.5 billion.

The fact that the low end was well under StreetAccount’s target of $19.48 billion was enough to spook investors, “who are eager to see Amazon’s hefty investments in AI pay off,” writes CNBC, noting that “the company has committed to spend up to $100 billion this year on AI as it races to build out data centers and software.”

CEO Andy Jassy said on the earnings call that “tariffs haven’t had a major impact on the business so far in 2025,” according to Business Insider, adding “though he said that could change later in the year.”

With 23 percent growth in digital advertising for the quarter, the category was something of a sector star. Although “dwarfed by Amazon’s retail and cloud units, it’s become a growing profit center and is also the third-biggest digital ad platform, trailing Meta and Alphabet,” CNBC reports.

In the company’s earnings announcement, Jassy emphasized the company’s commitment to AI, listing the expansion of Alexa+ to “millions of customers,” launch of the DeepFleet model optimized for robots, and the release of Bedrock AgentCore among the quarterly achievements.

The Wall Street Journal analyzes AWS (tracking toward $116 billion for the year) versus Microsoft Azure (which hit $75 billion for the first time in fiscal 2025), concluding “the irony is that the relative weakness in Amazon’s cloud business comes as the company’s retail side is humming.”

Online retail for products sold (as opposed to fulfilled for third parties) by Amazon jumped 11 percent year-over-year to $61.5 billion, says WSJ, describing it as “the best growth rate for that unit since early 2021 when Amazon was still benefiting from a COVID-19-induced online shopping spree.”

Grilled on the effects of tariffs, Jassy told analysts “it’s still unclear ‘who’s going to end up absorbing the higher costs,” while also citing “Amazon’s 2 million third-party sellers as a key advantage” since they “often offer more flexible prices,” according to Business Insider.