Amazon’s latest earnings report reveals a company at a crossroads. The e-commerce giant posted solid gains in its first quarter, but concerns loom over potential tariff impacts that could reshape its financial outlook.
Revenue climbed to $143.3 billion, marking a 13% increase compared to last year’s first quarter. This growth outpaced Wall Street’s expectations of $142.5 billion, according to data compiled by FactSet. The company’s cloud computing division, Amazon Web Services (AWS), contributed significantly with $25 billion in revenue, growing at 17% year-over-year.
“We’re seeing healthy consumer demand across our stores business, and AWS continues its strong performance,” said Andy Jassy, Amazon CEO, during the earnings call. “Our investments in AI are beginning to yield meaningful results for customers.”
Despite these positive figures, Amazon’s stock responded cautiously, dropping nearly 2% in after-hours trading. Investors appear concerned about the potential impact of proposed tariffs on goods imported from China, which could significantly affect Amazon’s retail business model.
The Biden administration recently announced it was considering raising tariffs on various Chinese imports, including electronics and consumer goods – key product categories for Amazon’s marketplace. Analysts estimate that roughly 40% of third-party sellers on Amazon source their products from China.
Mark Mahaney, senior managing director at Evercore ISI, noted: “The tariff situation presents a real wildcard for Amazon’s future margins. The company may need to absorb some of these costs or pass them to consumers, neither of which is ideal for growth.”
Amazon executives addressed these concerns by highlighting their diverse supply chain. “We’ve been diversifying our global supply network for years,” said Brian Olsavsky, Amazon’s CFO. “While tariff changes require adjustment, our scale gives us flexibility many retailers lack.”
The e-commerce segment showed resilience with North American sales up 12% to $86.3 billion. International operations grew by 10% to $31.9 billion. However, operating margins in both segments remain under scrutiny as logistics costs continue to rise.
Amazon’s massive investment in artificial intelligence stands out as a bright spot. The company reported capital expenditures of $14.9 billion for the quarter, much of it directed toward AI infrastructure. These investments support both AWS offerings and internal operational improvements.
“We’re deploying generative AI across our business,” Jassy explained. “From enhancing search results to optimizing delivery routes, we’re seeing tangible efficiency gains.”
The company has been actively expanding its AI partnerships. Last month, Amazon announced a deal with Anthropic to integrate Claude AI capabilities across its services. This follows earlier collaborations with other AI providers as Amazon works to position AWS as a leading platform for AI development.
Marketplace sellers, who account for over 60% of Amazon’s retail sales, express mixed feelings about the quarter. While sales volume grew, many worry about potential tariff pass-through costs.
“We’re already operating on thin margins,” said Maria Lopez, who sells kitchen products through Amazon. “If tariffs increase significantly and Amazon passes those costs to sellers, many of us will need to raise prices or find alternative suppliers.”
Amazon’s workforce remained relatively stable at 1.52 million employees worldwide. This follows several rounds of layoffs throughout 2023 that reduced headcount by approximately 27,000 positions.
Looking ahead, Amazon provided second-quarter guidance that fell slightly below analyst expectations. The company projected revenue between $144 billion and $149 billion, representing growth of 7% to 11%. Operating income is expected to be between $10 billion and $14 billion.
“The guidance reflects our cautious approach given macroeconomic uncertainties,” Olsavsky said. “We’re monitoring consumer spending patterns and potential policy changes that could affect our business.”
