{"id":1550195,"date":"2025-07-31T20:32:03","date_gmt":"2025-08-01T00:32:03","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1550195"},"modified":"2025-07-31T20:32:03","modified_gmt":"2025-08-01T00:32:03","slug":"amazon-slides-on-soft-profit-guidance-declining-aws-margins","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/amazon-slides-on-soft-profit-guidance-declining-aws-margins\/1550195\/","title":{"rendered":"Amazon Slides On Soft Profit Guidance, Declining AWS Margins"},"content":{"rendered":"

Amazon Slides On Soft Profit Guidance, Declining AWS Margins<\/span><\/p>\n

\n

With MSFT and META blowing away expectations yesterday and sending the Nasdaq to a new record high, if only to see all those gains disappear during the day, today attention turns to the other two Mag7 giants, AAPL and AMZN, with the latter reporting right after the close, and the former waiting the usual 30 minutes. As we reported in our preview, positioning both companies has been relatively weaker, with Goldman having AMZN at 7 out of 10 (AAPL is even worse at 4 out of 10), so expectations were more modest compared to yesterday’s two juggernauts heading into earnings where the buyside bogeys are as follows: i)\u00a0AWS growth of ~17% Q2 and ~18% Q3, with perhaps some upside risk to the Q3 number with GOOGL highlighting AI capacity coming online faster (note, management don\u2019t guide that number); ii)\u00a0Q2 net sales and EBIT high end of respective guides ($159-164B and $13-17.5B); iii)\u00a0Q3 guidance of net sales $176B & EBIT ~$20B (both high-ends; iv)\u00a0Post GOOGL, some expectation that AMZN tweak up the 2025 capex outlook from current ~$105BN.<\/p>\n

With that in mind, and considering the stock is now trading red after kneejerking green, it appears that the skeptics may have been right.\u00a0<\/p>\n

Here is what Amazon reported moments ago:<\/p>\n

EPS $1.68 vs. $1.59 q\/q, beating <\/strong><\/em>estimate $1.33
\n\t\u00a0
\n\tNet sales $167.70 billion, +13% y\/y, beating <\/strong><\/em>estimates of $162.15 billion, and above the upper end of the company’s guidance range of $159-$164BN
\n\tOnline stores net sales $61.49 billion, +11% y\/y, beating <\/strong><\/em>estimates $59.13 billion
\n\tPhysical Stores net sales $5.60 billion, +7.5% y\/y, beating <\/strong><\/em>estimates $5.49 billion
\n\tThird-Party Seller Services net sales $40.35 billion, +11% y\/y, beating <\/strong><\/em>estimate $38.97 billion
\n\tThird-party seller services net sales excluding F\/X +10% vs. +13% y\/y, estimate +7.49%
\n\tSubscription Services net sales $12.21 billion, beating <\/strong><\/em>estimate $11.92 billion
\n\tSubscription services net sales excluding F\/X +11%, beating <\/strong><\/em>estimate +9.68%<\/p>\n

Geographically, the results were strong all around:<\/p>\n

North America net sales $100.07 billion, +11% y\/y, beating <\/strong><\/em>estimate $97.36 billion
\n\tInternational net sales $36.76 billion, +16% y\/y, beating <\/strong><\/em>estimate $34.21 billion<\/p>\n

So far so good, with every line time beating.\u00a0But what the market was especially focused on was the high margin AWS data, and here numbers also beat solidly:\u00a0<\/p>\n

AWS net sales $30.87 billion, +17% y\/y, beating <\/strong><\/em>estimate $30.77 billion
\n\tAmazon Web Services net sales excluding F\/X +17% vs. +19% y\/y, beating <\/strong><\/em>estimate +17%<\/p>\n

Turning to operating profits, here the results were also uniformly solid:<\/p>\n

Operating income $19.17 billion, +31% y\/y, beating <\/strong><\/em>estimates $17 billion, and above the upper end of the company’s guided range of $13Bn – $17.5BN
\n\tOperating margin 11.4% vs. 9.9% y\/y, beating <\/strong><\/em>estimate 10.4%
\n\tNorth America operating margin +7.5% vs. +5.6% y\/y, beating <\/strong><\/em>estimate +5.78%
\n\tInternational operating margin 4.1% vs. 0.9% y\/y, beating <\/strong><\/em>estimate 1.87%<\/p>\n

As for fulfillment expenses, these came in slightly above estimates, while the seller unit mix was slightly worse than expected. These may continue to deteriorate as tariffs rise:\u00a0<\/p>\n

Fulfillment expense $25.98 billion, +10% y\/y, estimate $25.74 billion
\n\tSeller unit mix 62% vs. 61% y\/y, estimate 61.5%<\/p>\n

Of the above, the most notable highlight – as per our preview – was AWS which grew revenue by 17% to $30.9BN, just above the sellside estimate of $30.77BN. The problem: the growth rate is clearly slowing.<\/p>\n

<\/a><\/p>\n

And\u00a0if revenue growth for AWS just barely beat, what Wall Street may have been growing on is the continued decline in AWS operating margins, which at 32.9% was the lowest since 2023 and a drop both MoM and YoY.\u00a0Elsewhere, North American profit rose to $7.517 billion, resulting in a profit of 7.51%, beating estimates of 5.6%, while international margins rose to 4.06%, up from 0.9% and also beating estimates of 1.87%<\/p>\n

<\/a><\/p>\n

As a result of the drop in AWS profits, Amazon’s consolidated operating margin posted a sequential drop and in Q2 declined from a record high of 11.8% to 11.4%.<\/p>\n

<\/a><\/p>\n

However, while the above data was mixed if generally solid, it was the company’s guidance that led to an after hours drop in the stock; that’s because the company projected profit and revenue in the current quarter both of which were seen as coming in soft vs Wall Street expectations:<\/p>\n

Sees net sales $174.0 billion to $179.5 billion, above the estimate<\/strong><\/em> of $173.2 billion
\n\tSees operating income $15.5 billion to $2.05 billion, with the midpoint coming\u00a0below the estimate <\/strong><\/em>of $19.42 billion,<\/strong> vs $14.7 billion in Q2 2024.<\/p>\n

This means that revenue growth in Q2 is expected to print 13.1% YoY, or roughly where Q1 came.<\/p>\n

<\/a><\/p>\n

In response to the soft guidance and the disappointing AWS profit, the stock initially pumped but then promptly dumped as it now appears that the stellar results from yesterday are unlikely to be repeated…<\/p>\n

<\/a><\/p>\n

… as attention now turns to AAPL.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nThu, 07\/31\/2025 – 16:32<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/amazon-slides-soft-profit-guidance-declining-aws-margins<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Amazon Slides On Soft Profit Guidance, Declining AWS Margins With MSFT and META blowing away expectations yesterday and sending the Nasdaq to a new record…<\/p>\n","protected":false},"author":0,"featured_media":1550196,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-1550195","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbimBl-6vh9","jetpack_featured_media_url":"https:\/\/bugaluu.com\/news\/wp-content\/uploads\/sites\/3\/2025\/07\/amzn20growth20rate-aSQ7Pz.jpg","_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1550195","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1550195"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1550195\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1550196"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1550195"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1550195"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1550195"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}