Amazon delivered impressive results for Q1 2025, showcasing continued strength across its major business segments. The company’s core retail business maintained momentum through expanded selection, competitive pricing, and record-breaking delivery speeds. Meanwhile, AWS showed solid growth with a significant focus on AI capabilities, and the advertising business demonstrated strong performance.
| Financial indicators | Q1 2024 (US$ million) | Q1 2025 (US$ million) | Percentage change |
| Revenue | 143,313 | 155,667 | +8.6% |
| North America | 86,341 | 92,887 | +7.6% |
| International | 31,935 | 33,513 | +4.9% |
| AWS | 25,037 | 29,267 | +16.9% |
| Operating income | 15,307 | 18,405 | +20.2% |
| Net income | 10,431 | 17,127 | +64.2% |
| Operating cash flow (TTM) | 99,147 | 113,903 | +14.9% |
Retail business expansion
Amazon’s retail business continues to thrive through its relentless focus on selection, value, and delivery speed. The company welcomed several well-known brands to its platform in Q1 2025, including Oura Rings, Michael Kors, and The Ordinary. In a significant move to capture the luxury market, Amazon launched a new shopping experience with Saks, offering high-end fashion and beauty items from prestigious brands like Dolce & Gabbana, Balmain, Erdem, and Giambattista Valli.
Price-conscious consumers benefited from multiple deal events worldwide, with Amazon helping customers save over $500 million across the Big Spring sale in the U.S. and Canada, Spring Deal Days in Europe, and Ramadan/Eid Sale events in Egypt, Saudi Arabia, Türkiye, and the UAE. The company also announced its 11th Prime Day event scheduled for July 2025, providing additional opportunities for Prime members to access exclusive deals.
Everyday essentials growth
Everyday essentials emerged as a standout category, growing more than twice as fast as the rest of Amazon’s business and representing one out of every three units sold in the U.S. Even excluding Whole Foods Market and Amazon Fresh, the company ranks among the largest grocers in the U.S., with over $100 billion in gross sales last year.
AWS performance
AWS maintained strong growth momentum, increasing 17% year-over-year in Q1 2025 and reaching a $117 billion annualized revenue run rate. The cloud division continues to help organizations of all sizes accelerate their move to cloud computing, enabling infrastructure modernization at lower costs and faster innovation cycles.
During Q1, AWS secured new agreements with major companies including Adobe, Uber, Nasdaq, Ericsson, Fujitsu, Cargill, Mitsubishi Electric Corporation, General Dynamics Information Technology, GE Vernova, Booz Allen Hamilton, NextEra Energy, Publicis Sapient, Elastic, and Netsmart.
CEO Andy Jassy expressed confidence in AWS’s growth trajectory, noting that more than 85% of global IT spending remains on-premises. Before the current AI revolution, management believed AWS could eventually become a multi-hundred billion dollar revenue business; they now think it could be even larger.
AI investments and innovation
Amazon is investing aggressively in artificial intelligence across its entire business, with over 1,000 AI applications in development. In AWS, the company is building comprehensive AI capabilities at every level of the technology stack.
The custom AI chip Trainium is now being deployed in larger quantities, offering 30-40% better price performance compared to GPU-based instances, making AI more cost-effective for customers operating at scale. Amazon Bedrock, the company’s fully managed service for generative AI applications, continues to expand rapidly with the addition of new models including Anthropic’s Claude 3.7 Sonnet hybrid, Meta’s Llama 4 family, and DeepSeek R11.
Amazon also offers its own Nova foundation models through Bedrock, with thousands of customers already using them, including Slack, Siemens, Sumo Logic, Coinbase, FanDuel, Glean, and Blue Origin. The company recently released Amazon Nova Sonic, a new speech-to-speech foundation model enabling developers to build highly accurate voice-based AI applications.
Advertising growth
Amazon’s advertising business demonstrated impressive performance in Q1 2025, generating $13.9 billion in revenue and growing 19% year-over-year. The company offers a broad portfolio of full-funnel advertising solutions that help brands reach an average ad-supported audience of more than 275 million users in the U.S. alone.
Amazon Ads provides brands with tools to reach targeted audiences across numerous properties, including:
- Entertainment platforms: Prime Video, Twitch, and IMDB
- Live sports: NFL, NBA, and NASCAR
- Audio content: Amazon Music and Wondery
- Amazon’s online store
- External sites: Pinterest, BuzzFeed, and other premium third-party publishers
The company’s audience and measurement capabilities work across all these channels, with secure clean rooms allowing advertisers to analyze data, produce core marketing metrics, and understand cross-channel marketing performance.
Tariff considerations
Amazon management addressed potential concerns about heightened tariffs, noting they haven’t observed any demand reduction or significant price increases yet. In some categories, they’ve seen increased buying that might indicate customers stocking up before potential tariff impacts. The company believes it’s not uniquely susceptible to tariffs and may even be better positioned than competitors due to its broad selection, competitive pricing, and customer trust.
Key analyst questions
1. Tariff preparedness and operational resiliency. Eric Sheridan from Goldman Sach probed Amazon’s medium-term strategy for navigating potential tariff impacts and trade policy shifts. CEO Andy Jassy acknowledged uncertainty around future tariffs and emphasized that Amazon’s core strategy, offering broad selection, low prices, and fast delivery, remains central in both the short and long term. The company has taken steps such as forward-buying inventory and encouraging third-party sellers to do the same, aiming to minimize cost impact on customers. With over two million diverse sellers, Amazon believes this variety enables price resilience, as not all sellers will pass on tariff-related costs. Additionally, Amazon has been diversifying its supply chain away from China over the past six years to reduce geographic concentration and enhance flexibility.
2. AWS margin sustainability. Douglas Anmuth from JP Morgan Chase sought clarity on AWS’s margin expansion to near 40%, questioning whether this reflects structural improvements or temporary optimizations. CFO Brian Olsavsky attributed AWS’s strong quarterly margin performance to robust growth and continued investment in innovation. Key drivers included software and process improvements that optimize server capacity, the use of low-cost custom networking equipment, and enhanced power efficiency in data centers. The adoption of custom silicon like Graviton has further reduced costs and improved price-performance for customers. Management noted that margins remain influenced by infrastructure investments, pricing dynamics, and the evolving mix of generative AI services, with additional infrastructure spending expected in the second half of the year.
3. AWS backlog and enterprise migration trends. Brent Thill from Jefferies LLC inquired about AWS’s contractual backlog and enterprise cloud adoption patterns. Amazon reported a Q1 backlog of $189 billion with an average contract term of 4.1 years. Management noted a renewed enterprise focus on cloud migration, following a pandemic-era shift toward cost optimization. While interest in generative AI continues to grow, many companies are still in the pilot phase, awaiting improved cost efficiency. At the same time, there is growing recognition of the long-term benefits of moving infrastructure to the cloud, leading to a resurgence in AWS migration plans.
The fifth perspective
Amazon’s Q1 2025 results demonstrate the company’s resilience and adaptability in an evolving marketplace. With retail operations showing robust growth, AWS expanding its cloud dominance, and advertising becoming an increasingly important revenue stream, Amazon continues to execute effectively across multiple business lines. By developing both the foundational infrastructure and practical applications of AI, Amazon is positioning itself to benefit from what CEO Andy Jassy describes as the reinvention of “every customer experience” through artificial intelligence.
As the company navigates potential challenges like tariff increases, its diverse business model, technological leadership, and customer-centric approach should provide considerable resilience. With significant growth opportunities still ahead in cloud computing, AI development, advertising, and global e-commerce, Amazon remains well-positioned to deliver continued value to both customers and shareholders in the coming years.
