Amazon Q3 Preview: Focus on cloud growth, AI and tariff

[Amazon logotype printed on cardboard box]
AdrianHancu

Amazon’s (AMZN [https://seekingalpha.com/symbol/AMZN]) cloud computing unit and artificial intelligence investment are expected to take the limelight during the e-commerce giant’s third quarter results on Thursday.

Wall Street expects [https://seekingalpha.com/symbol/AMZN/earnings/estimates?period=quarterly] the Andy Jassy-led company to post EPS of $1.57 on revenue of $177.76 billion, implying a rise of 24% during the quarter.

Investors were left disappointed after Amazon Web Services cloud computing unit failed to live up to expectations last quarter, especially when compared to rivals including Microsoft and Google. Even though AWS represents just a part of Amazon's total revenue, it is considered a key profit engine, typically accounting for a significant portion of Amazon's overall operating income.

Seattle-based Amazon’s light operating income guidance for the current quarter also spooked the market, as investors are eager to see tangible returns on the billions of dollars poured into AI infrastructures.

The market is also keeping on eye on Amazon’s core e-commerce business for any uncertainties from the tariff policies, after Jassy said that it is difficult to predict the impact.

A recent Seeking Alpha analysis pointed out [https://seekingalpha.com/article/4833753-amazon-critical-questions-that-will-define-q3-2025-earnings] that “investors continue to look for execution consistency, which could mean several quarters of AWS reacceleration and margin resilience in core commerce to reset credibility.”

Analysts are still positive on the stock. Seeking Alpha analysts and Wall Street rated it a Buy and above, while Seeking Alpha’s Quant ratings are cautious and consider it a Hold.

“We are constructive on the setup leading into the report given positive commentary around AWS growth, healthy trends for the core retail business, and strong advertiser demand,” said Wedbush analyst Scott Devitt, adding that data for Prime Day appears healthy and imply a strong start to Q3 for the retail segment.

Over the last three months, EPS estimates have seen 22 upward revisions [https://seekingalpha.com/symbol/AMZN/earnings/revisions], compared to 10 downward revisions, while revenue estimates have been revised upwards 38 times versus no downward moves.

The company has started a broader layoff, which will affect [https://seekingalpha.com/news/4509123-amazon-to-cut-14000-jobs-in-major-corporate-restructuring] 14,000 corporate office workers of the tech giant. Its stock has risen nearly 5% so far this year, compared to the 17% rise in the broader S&P 500 Index.

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