Amazon Q2 Earnings Preview: tariffs, mixed demand and AWS under scrutiny

Amazon (AMZN) is set to release its Q2 2025 earnings after the close on 31 July, with investors focused squarely on the effects of softer consumer demand, the impact of the latest escalation in US-China trade tensions, and the company’s progress in monetising artificial intelligence through Amazon Web Services (AWS). 

Amazon tipped to deliver modest growth as investors eye outlook

Analysts expect Amazon to deliver adjusted EPS of $1.809, up 9% year-on-year, on revenue of $162.1 billion. However, with tariffs threatening to disrupt supply chains, consumer demand showing signs of strain and questions lingering over AWS’s ability to monetise AI, the company’s forward commentary could prove as important as the reported results.

The retail environment has softened in recent months as US households face persistent uncertainty due to trade policy. Amazon’s core e-commerce operations remain vulnerable to this trend, with consumers showing increasing caution over discretionary purchases.

The company also faces mounting competition from low-cost challengers like Shein and Temu, which are continuing to gain share by offering aggressively priced alternatives. This could force Amazon to compete more heavily on price to protect market share, a dynamic that may squeeze margins in an already fragile demand environment.

Amazon is also highly exposed to tariffs on Chinese manufacturers, particularly in its private-label lines and consumer electronics categories. These tariffs will likely raise procurement costs and could complicate inventory management heading into the crucial holiday season. Management faces a difficult choice: absorb the costs and risk pressuring profitability, or pass them on to customers at the risk of further dampening demand.

The uncertainty surrounding further retaliatory measures from China, as well as potential knock-on effects for shipping and logistics, only adds to the challenge, threatening to erode margins from weaker demand and higher costs.

AWS and artificial intelligence remain a critical pillar

AWS remains Amazon’s most profitable division, but growth has plateaued in recent quarters. With rivals Microsoft Azure and Google Cloud showing clear AI-driven revenue acceleration, the pressure is mounting for Amazon to demonstrate that its investments in artificial intelligence can deliver similar results. AWS’s performance this quarter, along with any updates to forward guidance, will be a key driver of market sentiment.

Analysts remain bullish on Amazon with stock climbing towards highs

Analyst sentiment towards Amazon remains overwhelmingly positive ahead of its Q2 2025 earnings. According to the latest Bloomberg data, 93.9% of analysts rate the stock a “buy” or “outperform,” with just 6.1% holding a neutral view and no firms recommending a sell. The consensus 12-month price target stands at $252.47.

Amazon’s technicals are bullish, with the stock in an uptrend and within a few percent of record highs. A solid set of results could see the share price challenge resistance at all time highs above $US240. Meanwhile, upward sloping trendline support represents a critical level, which if broken, may signal a deeper pullback and potential reversal.

(Source: Trading View)
(Past performance is not a reliable indicator of future results)