Amazon stock earnings for the first quarter surpassed expectations, reporting an EPS of $1.59 on revenue of $155.7 billion, compared to the Street’s expectation of $1.37 EPS and $155.1 billion revenues. The sales for this quarter also marked a 9% increase year-over-year and a staggering 62% increase in earnings. This is a significant achievement in today’s volatile economic climate. However, Amazon’s operating income guidance for the second quarter has raised some doubts. The company is guiding at a range of 13 to $17.5 billion, significantly lower than the $17.8 billion analysts were expecting wild speculative swings in market sentiment. 

Amazon’s impressive performance in AWS and advertising

In the face of all of this, AWS (Amazon Web Services) continues to be a major driver of profit for the company, reporting revenue of $29.3 billion which is in line with expectations. This underlines the still critical importance of Amazon′s cloud computing subsidiary. The waiting game associated with US tariffs, including those on Chinese imports and any counter tariffs that may be initiated by China, is possibly what led to the lack of optimism regarding Amazon’s expectations for Q2. As Amazon’s chief operator, Jassy, noted,

“Amazon is maniacally focused on keeping prices low,” and, at the same time, he expressed concern about growing tariffs. “

Tariffs were not deepening the price Amazon holds on market goods, but rather demonstrating the fact that Amazon is likely to experience challenges with prices brought forth by its outlets or suppliers”. The so-called advantage of Amazon’s marketplace is the fact that many of their third-party sellers import products directly from China.” He pointed out that the impact of these tariffs is much smaller for those companies that have a high proportion of third-party sellers compared to traditional supply chain retailers dominated by strong import substitutes. 

The Future of AWS, Advertising, and Tariff Uncertainty

Amazon’s AWS and advertising divisions are expected to be leveraged as the company sails through economic turbulence and tariff challenges. Even with the Amazon mixed guidance, the company is still able to be financially resilient due to its various revenue streams. However, the ongoing impact of tariffs and unstable markets are likely to worsen the overall sentiment. Amazon’s approach on these issues while sustaining leadership in cloud computing and digital advertising will primarily shape its strategy in the upcoming months.