Cloud computing and online retail behemoth Amazon (NASDAQ:AMZN) reported Q4 CY2025 results topping the market’s revenue expectations, with sales up 13.6% year on year to $213.4 billion. The company expects next quarter’s revenue to be around $176 billion, close to analysts’ estimates. Its non-GAAP profit of $1.95 per share was in line with analysts’ consensus estimates.
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Amazon (AMZN) Q4 CY2025 Highlights:
- Revenue: $213.4 billion vs analyst estimates of $211.6 billion (0.9% beat)
- Operating Profit (GAAP): $24.98 billion vs analyst estimates of $25.08 billion (small miss)
- EPS (GAAP): $1.95 vs analyst expectations of $1.96 (in line)
- North America Revenue: $127.1 billion vs analyst estimates of $127 billion (small beat)
- AWS Revenue: $35.58 billion vs analyst estimates of $34.85 billion (2.1% beat)
- North America Operating Profit: $11.47 billion vs analyst estimates of $10.83 billion (6% beat)
- AWS Operating Profit: $12.47 billion vs analyst estimates of $12.06 billion (3.3% beat)
- Operating Margin: 11.7%, in line with the same quarter last year
- Market Capitalization: $2.38 trillion
StockStory’s Take
Amazon’s fourth quarter was marked by strong revenue growth and ongoing investment in emerging areas, but the market responded negatively. Management attributed performance to acceleration in AWS, particularly AI and custom silicon, and continued gains in online retail, grocery delivery, and advertising. CEO Andrew Jassy emphasized, “We are seeing strong growth, and with the incremental opportunities available to us in areas like AI, chips, low earth orbit satellites, quick commerce, and serving more consumers’ everyday essentials needs, we have a chance to build an even more meaningful business.” Management also discussed the impact of special charges and incremental costs related to supply chain transformation and technology investments.
Looking forward, Amazon’s guidance is shaped by heavy capital investment plans, especially in AI infrastructure and satellite connectivity, and ongoing expansion of retail and delivery services. CEO Jassy highlighted that “the primary way companies will get value from AI is with agents,” and described substantial demand for AWS’s AI and custom chip offerings. Management noted that increased spending on Amazon LEO satellite launches and continued enhancements to fulfillment and automation will affect near-term profitability. CFO Brian Olsavsky cautioned that operating income will fluctuate as the company prioritizes long-term growth over short-term margin stability.
Key Insights from Management’s Remarks
Management attributed the quarter’s top-line growth to accelerating AWS adoption, strong retail demand for everyday essentials, and expanding advertising offerings, while noting that investments in new technology and supply chain improvements affected profitability.
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AI-driven AWS momentum: AWS posted its fastest growth in over three years, as enterprise and AI-native workloads drove demand for both core cloud services and new AI infrastructure. Management highlighted custom silicon (Tranium and Graviton) as critical differentiators, now exceeding $10 billion in annualized run rate.
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Retail and grocery growth: Everyday essentials and grocery categories grew nearly twice as fast as other segments, with over one in three store units sold in these categories. Same-day delivery, now available in thousands of U.S. cities, led to higher purchase frequency among customers using the service.
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Advertising expansion: Amazon’s advertising revenue increased 22% year over year, supported by AI-enabled campaign creation tools and the continued rollout of Prime Video ads. Sponsored products and new ad formats delivered higher engagement for brands and incremental revenue for Amazon.
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Supply chain and delivery innovation: Management cited ongoing improvements in the regionalized fulfillment network and robotics, contributing to faster delivery speeds and reduced cost to serve. Features like “add to delivery” and expanded ultra-fast Amazon Now offerings supported customer satisfaction and order consolidation.
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Capital allocation to emerging technologies: Significant investments were directed toward next-generation projects, including Amazon LEO satellite connectivity and the launch of new AI services such as NovaForge and Bedrock Agent Core. These initiatives are expected to position Amazon for long-term growth but weighed on operating margins in the quarter.
Drivers of Future Performance
Amazon’s outlook is influenced by aggressive investment in AI, cloud, satellite infrastructure, and fulfillment automation, aiming to drive top-line growth while accepting near-term margin fluctuations.
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AI and cloud infrastructure investment: Management plans to continue aggressive capital spending in AWS, particularly for AI training and inference capacity. CEO Jassy stated that the bulk of capital will flow to AI, reflecting strong enterprise demand and the expectation that “every customer experience…is going to be reinvented with AI.”
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Retail network optimization: Expansion of same-day delivery, quick commerce, and perishable grocery offerings is expected to increase customer engagement and frequency. Management is also investing in robotics and regionalization to further reduce delivery times and costs, with an emphasis on scaling these improvements globally.
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Satellite and connectivity expansion: Costs related to Amazon LEO satellite launches will rise in the coming quarters, with commercial rollout planned later this year. Management expects these investments to enable new service offerings, especially in underserved markets, but acknowledged that near-term expenses will pressure operating income.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will focus on (1) the pace at which AWS can add and monetize new AI and custom silicon capacity, (2) the impact of fulfillment network automation and regionalization on retail margins, and (3) progress in commercializing Amazon LEO satellite services. The trajectory of grocery and everyday essentials growth, as well as adoption rates for new AI-powered consumer features, will also be closely monitored.
Amazon currently trades at $204.82, down from $223.14 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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