Amazon.com Inc (AMZN) Q3 2025 Earnings Call Highlights: Robust Revenue Growth and Strategic ...

This article first appeared on GuruFocus.

Revenue: $180.2 billion, up 12% year over year, excluding foreign exchange impact. Operating Income: $17.4 billion, impacted by $4.3 billion in special charges. Free Cash Flow: Trailing 12-month free cash flow of $14.8 billion. AWS Revenue: $33 billion, up 20.2% year over year. North America Revenue: $106.3 billion, an increase of 11% year over year. International Revenue: $40.9 billion, up 10% year over year, excluding foreign exchange. Advertising Revenue: $17.7 billion, with growth accelerating for the third consecutive quarter. Net Income: $21.2 billion, including a pretax gain of $9.5 billion from investment in Anthropic. CapEx: $34.2 billion in Q3, with $89.9 billion spent year-to-date. Third-Party Seller Unit Mix: 62%, up 200 basis points from the previous year.

Warning! GuruFocus has detected 4 Warning Sign with AMZN. Is AMZN fairly valued? Test your thesis with our free DCF calculator.

Release Date: October 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Amazon.com Inc (NASDAQ:AMZN) reported strong revenue growth of 12% year over year, reaching $180.2 billion, excluding foreign exchange impacts. AWS experienced a significant reacceleration in growth, with a 20.2% year-over-year increase, marking the largest growth rate in 11 quarters. The company is expanding its rural delivery network, committing over $4 billion to enhance service in small towns, increasing access to same-day and next-day delivery by 60%. Amazon's advertising revenue grew by 22% year over year, reaching $17.6 billion, with strong growth across its full funnel advertising offerings. Amazon.com Inc (NASDAQ:AMZN) is heavily investing in AI and robotics, with over 1 million robots in its fulfillment network, enhancing safety, productivity, and speed.

Negative Points

Amazon.com Inc (NASDAQ:AMZN) faced two significant expenses in Q3: a $2.5 billion FTC settlement and $1.8 billion in severance costs, impacting operating income. The company is experiencing challenges with capacity constraints, particularly in power, which could potentially shift to chip constraints in the future. Despite strong growth, AWS's operating margins are impacted by increased investments in data center expansion and custom silicon. Amazon.com Inc (NASDAQ:AMZN) is undergoing cultural and structural changes, including headcount reductions, to maintain a lean and fast-moving organization. The customer experience with third-party agents in agentic commerce is currently lacking in personalization, accurate delivery estimates, and pricing.

Story Continues

Q & A Highlights

Q: Can you discuss your current capacity levels for AWS and the demand for Trainium outside of major customers? A: Andrew Jassy, CEO: We've added 3.8 gigawatts of capacity in the last year and expect to double our capacity by 2027. Trainium2 is fully subscribed and has grown 150% quarter over quarter. We see strong demand for Trainium3 from both large and medium-sized customers, with broader availability expected in early 2026.

Q: How does Amazon view the potential for Trainium3 compared to third-party chips? A: Andrew Jassy, CEO: We maintain multiple chip options for customers, including a strong relationship with NVIDIA. Trainium offers 30-40% better price performance, which is crucial for customers scaling AI workloads. Trainium3 is expected to be 40% better than Trainium2, and we are focused on delivering it quickly and in volume.

Q: Can you elaborate on Project Rainier and its significance for AWS and customers? A: Andrew Jassy, CEO: Project Rainier, used by Anthropic, leverages a large cluster of Trainium2 chips, showcasing AWS's infrastructure capabilities. While specific to Anthropic, other customers are interested in similar large-scale deployments, which we aim to support with Trainium3.

Q: How is Amazon's grocery business evolving, particularly with perishables and delivery? A: Andrew Jassy, CEO: Our grocery business, excluding Whole Foods and Fresh, has surpassed $100 billion in gross merchandising sales. We've expanded same-day delivery for perishables to 1,000 cities, with plans to reach 2,300 by year-end. This service is changing customer habits and significantly growing our grocery segment.

Q: What role will robotics and automation play in Amazon's operations? A: Andrew Jassy, CEO: Robotics is a major investment area, with over 1 million robots in our fulfillment network. They enhance safety, productivity, and speed, allowing human workers to focus on problem-solving. We will continue to invest in robotics to improve customer experience and operational efficiency.

Q: How does Amazon view the future of agentic commerce? A: Andrew Jassy, CEO: Agentic commerce has the potential to enhance online shopping experiences, especially for customers who are unsure of what they want. Our AI-powered assistant, Rufus, and features like Buy for Me are part of our efforts. We are also exploring partnerships with third-party agents to improve customer experiences.

Q: What is driving the acceleration in AWS growth, and how significant are AI workloads? A: Andrew Jassy, CEO: AWS growth is driven by both AI and core services. We see strong demand for AI tools like Bedrock and SageMaker, and enterprises are increasingly moving from on-premises to the cloud. Our momentum suggests continued growth at a strong pace.

Q: Can you break down the growth in Amazon's advertising segment? A: Andrew Jassy, CEO: Our advertising growth is broad-based, with strong performance across all offerings. We have a robust full-funnel approach, from awareness to point-of-sale. Our demand-side platform, enhanced by partnerships with Roku, Netflix, and others, is growing rapidly, contributing significantly to our advertising revenue.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

View Comments