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Amazon is expected to report second quarter revenue for 2025 on Thursday after its end, and Wall Street is looking forward to another vital update on company performance across retail, advertising and cloud. Analysts expect strong revenue growth driven by e-commerce resilience, stable AWS demand and increased advertising momentum, but margin pressure from tariffs and AI-related capital expenditures looms as a potential headwind. Amazon has shared more than 20% since early May, but still trades in a pack rating between the epic seven people, so investors are clear about how to balance large investments in artificial intelligence infrastructure with sustainable profitability.
Second quarter expectations are seeking revenue of $1622.8 billion, up 9.7% year-on-year, within Amazon's guidance of $1599-$164 billion. The consensus EPS is $1.33, an 8% increase from last year, with a track record of company topping estimates. Amazon has surpassed the Zacks EPS consensus in each of the last 10 quarters, often by double digits of the Zacks EPS consensus. Analyst Project AWS revenues are nearly $30.7 billion, reflecting a year-on-year growth of around 17%, while advertising business is expected to increase by 19% over the same period. At retailers, the consensus model seeks revenue growth in North America at around 8%, with some banks, such as Bank of America, seeing evidence close to 10% considering strong credit card spending and international dollar profits.
The North American segment remains at its focus. The region's operating margins have rebounded significantly near the quarter from a low 1.1%, at 1.1% in early 2024, but analysts are debating whether tariffs can dig into this momentum. Visible alpha shows estimates ranging from 4.5% to 7.7%. Internationally, the margins are expected to improve to around 1.5% thanks to FX Tailwinds, but the estimate ranges from minus 4.4% to almost 6%, highlighting what uncertainty tariffs and currency movements bring. Management commentary on returning to school and holiday outlook is important for investors looking to measure retail trajectory later this year.
On AWS, growth expectations remain high, but margins may see pressure. In the last quarter, AWS recorded an operating margin of 39%, and Consensus expects to fall to 35% in Q2 as Amazon has increased its AI-related infrastructure spending. The forecast ranges from 28% to 39%, reflecting discussions about stages that are colliding with P&L. Analysts are keen to see if Amazon is raising its facility vision to match rivals like Alphabet. UBS now expects Amazon will spend between $100 billion and $112 billion in 2025. The AI infrastructure is the main driver. Morgan Stanley also believes that Amazon is likely to hike Capex in the coming quarter as part of the escalating AI Arms Race.
AI is central to the investing story. Amazon recently acquired Bee, a private AI startup, to bolster the efforts of consumer agent AI. On the enterprise side, AWS continues to rely on custom silicon such as train chips, and engineers have unveiled new cooling technologies to support Nvidia's large-scale AI systems. BMO analysts argue that these agent capabilities are underrated and can unlock meaningful efficiency for customers. Both City and Wedbush flags AWS' AI buildouts are a catalyst as potential catalysts for accelerated growth in the second half of 2025, Scotia considers it a perception that AWS is worried about slower generating Markee AI models compared to Google and Microsoft, if Amazon doesn't highlight meaningful advances.
Advertising is another important growth driver. The consensus model calls for 19% year-on-year growth driven by sponsored products and Amazon's push to streaming video ads. BAML and its citizens hope that this segment will remain a bright spot, supported by Amazon's large consumer data set and the growth of its connected TV footprint. Management's final disclosure shows that the advertising business is steadily progressing at a $70 billion annual execution rate, making it one of the fastest growing parts of the Amazon portfolio.
Meanwhile, retailers will get an additional boost from Prime Day over four days this year. Early reports were inconsistent, with some channel checks suggesting softer performance, while others later confirmed record sales. Both City and BMO believe the event ultimately provided a tailwind, with City highlighting strong continuous retail trends in backtools. However, some skeptics, including technical analysts, have argued that Prime Day hype may be exaggerated, and that a decline in average selling prices can offset the increase in volume.
Customs duties remain wildcards. Management previously estimated the impact of the $900 million second quarter costs associated with mutual tariffs. This may be easier to manage compared to Amazon's larger scale, but uncertainty about future trade actions continues to make cloud visibility. Pricing strategies and consumer demand are closely scrutinized as North America generates around 60% of Amazon's revenue and a third of EBIT. Analysts point out that the company's global sourcing model is particularly vulnerable to new rounds of tariff escalation.
Beyond core operations, Amazon continues to invest heavily in long-term initiatives. The company's satellite broadband initiative, Project Kuiper, estimates a total build-out cost of $23 billion per year and a potential consumer revenue of $7 billion per year by 2032. The efficiency of robotics, same-day delivery, and new fulfillment remains a strategic lever, pointing out that it improves transportation and inventory placement as drivers for the recent margin gain.
Investor sentiment towards income is extremely bullish. UBS, BAML, CITI and citizens have all raised their price targets in recent weeks. Morgan Stanley has a $350 bull case PT, citing the background of AI-driven AWS acceleration and more favorable tariffs. Still, caution remains: Scotia emphasizes margin risk on AWS, but some independent analysts warn of potential erosion of free cash flow if CAPEX is actively increasing.
Ultimately, Thursday's report will be judged in three axes: AWS growth and margin sustainability, retail resilience within tariffs, and an overview of its AI and CAPEX roadmap. A significant increase in stocks over the last few months has led to high expectations, particularly disappointment with margins and guidance. Conversely, a clean beat with a powerful AI story could bolster Amazon's position as one of Wall Street's top tech picks in the second half of 2025.
Do you want me to build it too? A table of important consensus expectations (Revenue, EPS, AWS, Advertising, Retail Margin) So, is it easy for readers to benchmark results after AMZN reports?
