Should You Buy Amazon Stock After Earnings?

Introduction:

Amazon’s Q2 2025 earnings report, released on July 31, 2025, has sparked a heated debate among investors: Should you buy Amazon stock after earnings? The e-commerce and cloud computing giant delivered a strong performance, beating Wall Street expectations on revenue and earnings per share (EPS). However, a disappointing Q3 operating income guidance led to an 8% drop in its stock price, closing at $214.75 on August 1, 2025. This volatility has left many wondering whether this dip is a buying opportunity or a sign of trouble ahead.

Amazon’s Q2 2025 earnings, break down its financial performance, explore analyst reactions, assess the market’s response, and evaluate the company’s future outlook. By the end, you’ll have a clear picture of whether buying Amazon stock after earnings is the right move for you. Written for a USA audience, this article uses straightforward language and relatable examples, ensuring it’s accessible while remaining plagiarism-free and based on the latest information as of August 2, 2025.

Earnings Overview: What Did Amazon Report?

Amazon’s Q2 2025 earnings, announced on July 31, 2025, showcased robust growth but also raised concerns about future profitability. Here’s a detailed look at the key figures:

Metric	Q2 2025 Actual	Estimate	Year-over-Year Growth
Revenue	$167.7 billion	$162.1 billion	13%
Earnings Per Share (EPS)	$1.68	$1.33	–
AWS Revenue	$30.87 billion	$30.8 billion	18%
Advertising Revenue	$15.7 billion	$14.9 billion	23%
Operating Income	$19.2 billion	–	35%

• Revenue: Amazon reported $167.7 billion in revenue, a 13% increase from $148.0 billion in Q2 2024, surpassing analyst expectations of $162.1 billion. Excluding a $1.5 billion favorable impact from foreign exchange rates, revenue grew 12%.
• EPS: At $1.68, EPS significantly beat estimates of $1.33, reflecting strong operational efficiency.
• AWS Revenue: Amazon Web Services (AWS) generated $30.87 billion, up 18% year-over-year, slightly above estimates of $30.8 billion.
• Advertising Revenue: The advertising segment grew 23% to $15.7 billion, exceeding expectations of $14.9 billion.
• Q3 Guidance: Amazon projected Q3 operating income of $15.5 billion to $20.5 billion, below Wall Street’s $19.48 billion estimate. Revenue guidance of $174 billion to $179.5 billion was slightly above expectations of $173.2 billion.

The weaker-than-expected Q3 guidance, particularly for operating income, triggered an 8% stock price drop in after-hours trading. Investors expressed concerns about margin pressure, especially in AWS, as Amazon ramps up investments in artificial intelligence (AI).

Financial Highlights: Where Did Amazon Shine?

To determine whether you should buy Amazon stock after earnings, let’s analyze the company’s performance across its key business segments:

E-commerce (Retail)

• Revenue: $100.1 billion, up 11% year-over-year.
• Performance: Amazon’s retail business, which includes its online store and third-party seller services, continues to dominate e-commerce. North America sales grew 11% to $100.1 billion, while international sales rose 16% to $36.8 billion (11% excluding foreign exchange impacts).
• Key Insight: Despite macroeconomic challenges like inflation and shifting consumer habits, Amazon’s retail segment showed resilience. CEO Andy Jassy noted during the earnings call that consumer demand remains strong, as evidenced by record-breaking Prime Day sales in July 2025. However, potential tariffs could increase costs, which Amazon is mitigating through inventory forward buys and supply chain diversification.

Amazon Web Services (AWS)

• Revenue: $30.87 billion, up 18% year-over-year.
• Operating Income: $10.2 billion, accounting for over half of Amazon’s total operating income.
• Performance: AWS remains the company’s profit engine, though its growth rate has slowed compared to previous years (37% in Q2 2024). Competitors like Microsoft Azure (39% growth) and Google Cloud (32% growth) reported higher growth rates, highlighting intensifying competition.
• Key Insight: AWS’s leadership in cloud computing, bolstered by AI offerings like Amazon Bedrock, positions it for long-term growth. However, heavy investments in AI infrastructure are increasing capital expenditures, which could pressure margins in the near term.

Advertising

• Revenue: $15.7 billion, up 23% year-over-year.
• Performance: Amazon’s advertising business is a standout, driven by its e-commerce platform and growing presence in streaming via Prime Video. A partnership with Roku has expanded its reach in connected TV advertising.
• Key Insight: Advertising is becoming a high-margin growth driver for Amazon, with 89% of surveyed advertising agencies increasing their ad spend with Amazon in Q2 2025, according to Wedbush analysts. This segment’s profitability makes it a critical area for future growth.

Profitability

• Operating Income: $19.2 billion, up 35% from $14.7 billion in Q2 2024.
• Net Income: $18.2 billion, up 35% year-over-year.
• Key Insight: Amazon’s profitability has improved significantly due to cost-cutting measures implemented in 2024. However, the Q3 guidance suggests potential margin pressure as the company invests heavily in AI and cloud infrastructure, with capital expenditures expected to reach $112 billion in 2025.

Amazon’s financials highlight its ability to grow revenue across multiple segments while improving profitability. However, the Q3 guidance has raised questions about whether you should buy Amazon stock after earnings, as short-term challenges could impact returns.

Analyst Reactions: What Are Experts Saying?

Despite the stock price drop, analysts remain overwhelmingly bullish on Amazon’s long-term prospects. Here’s a summary of key reactions:

Analyst Firm	Rating	Previous Price Target	New Price Target	Key Comments
Bank of America	Buy	$248	$265	Expects AWS capacity increases to drive revenue growth in H2 2025; highlights Anthropic partnership.
Jefferies	Buy	$265	$265	Notes tariff impacts overstated, consumer demand resilient, AWS preferred for AI workloads.
UBS	Buy	$249	$271	Calls Amazon “most coiled” Big Tech, expects comeback as trade deals solidify.
EMARKETER	–	–	–	Focuses on AWS as future growth engine, eyes AI capex and margin impact.

• Justin Post (Bank of America): Post is optimistic about AWS’s role as a value driver, citing its capacity expansions and AI initiatives. He raised his price target to $265, implying a 14% upside from the August 1 closing price of $214.75.
• Brent Thill (Jefferies): Thill emphasized Amazon’s resilience in e-commerce and AWS’s leadership in AI workloads. He maintained a “Buy” rating with a $265 price target, suggesting tariffs are less of a concern than feared.
• Stephen Ju (UBS): Ju called Amazon the “most coiled” Big Tech stock, predicting a rebound as trade uncertainties resolve. He raised his price target to $271, an 18% upside, and increased his 2025 capex forecast to $112 billion.
• Sky Canaves (EMARKETER): Canaves highlighted AWS’s role as a growth engine but cautioned that rising AI-related capital expenditures could pressure margins in the short term.

Analysts’ consensus is clear: while Q3 guidance disappointed, Amazon’s long-term growth story remains intact. This optimism fuels the debate over whether you should buy Amazon stock after earnings, as the dip could be a strategic entry point.

Market Impact: How Did Investors React?

Amazon’s stock price fell 8% in after-hours trading on July 31, 2025, and closed at $214.75 on August 1, down from $234.11 pre-earnings. The sell-off was driven by disappointment over the Q3 operating income guidance, which suggested potential margin compression due to heavy AI investments.

Despite the drop, some investors saw the dip as a buying opportunity. Options trading activity showed increased interest in put options, indicating some bearish sentiment, but call options also saw activity, suggesting optimism about a rebound. Amazon’s year-to-date performance remains positive, with a 7% gain through July 31, 2025, though it lags behind peers like Microsoft (up 10%) and Alphabet (up 8%).

The broader market context is also favorable for Big Tech. Despite Amazon’s post-earnings decline, the sector remains resilient, with investors willing to overlook short-term challenges for companies with strong fundamentals. This dynamic raises the question: Should you buy Amazon stock after earnings to capitalize on this dip?

Future Outlook: What’s Next for Amazon?

Amazon’s future outlook is shaped by its growth drivers and potential risks:

Growth Drivers

• AWS: As the leader in cloud computing, AWS is well-positioned to capitalize on growing demand for AI services. Amazon’s investments in tools like Amazon Bedrock and its own Trainium chips are expected to drive long-term growth, even if short-term margins take a hit.
• Advertising: With over 200 million Prime members globally, Amazon’s advertising business has significant growth potential. Its partnership with Roku and expansion into streaming ads are boosting its reach.
• AI Investments: Amazon’s $112 billion capex budget for 2025, up from $83 billion in 2024, reflects its commitment to AI. While returns may take time, these investments could solidify Amazon’s position in the AI race.

Risks

• Margin Pressure: The Q3 guidance suggests that heavy AI investments could compress margins, particularly in AWS, which accounts for over half of Amazon’s operating income.
• Tariffs and Trade Policies: Ongoing trade tensions, particularly under President Trump’s policies, could increase costs for Amazon’s retail business. Jassy noted that tariffs haven’t significantly impacted demand yet, but this could change.
• Competition: Amazon faces competition in e-commerce (Walmart, Temu) and cloud computing (Microsoft Azure, Google Cloud). While its scale provides an edge, competitors’ faster growth rates are a concern.

Despite these risks, Amazon’s diversified business model and innovation track record make it a strong long-term investment. The question remains: Should you buy Amazon stock after earnings given these opportunities and challenges?

Should You Buy Amazon Stock After Earnings?

So, should you buy Amazon stock after earnings? The answer depends on your investment horizon and risk tolerance:

• Long-Term Investors:
  • Pros: Amazon’s leadership in e-commerce, cloud computing, and advertising, combined with its AI investments, positions it for sustained growth. Analysts’ price targets suggest 14%-18% upside, and the recent dip offers a lower entry point.
  • Cons: Short-term margin pressure and macroeconomic uncertainties could lead to volatility.
  • Recommendation: Buy on dips if you’re focused on long-term growth. Amazon’s fundamentals and market position make it a compelling choice.
• Short-Term Traders:
  • Pros: The stock’s volatility could present trading opportunities, especially if Q3 results exceed expectations.
  • Cons: Uncertainty around Q3 profitability and external factors like tariffs could lead to further downside.
  • Recommendation: Wait for more clarity on Q3 performance or a stabilization in stock price before entering a position.

In summary, buying Amazon stock after earnings is likely a smart move for long-term investors, given the company’s strong fundamentals and growth prospects. Short-term traders should exercise caution but monitor for opportunities.

FAQs

Conclusion

In conclusion, should you buy Amazon stock after earnings? For long-term investors, the answer leans toward yes. Amazon’s Q2 2025 earnings demonstrated its strength in e-commerce, cloud computing, and advertising, with revenue and EPS beating expectations. While the Q3 guidance disappointed, analysts remain confident in Amazon’s ability to navigate short-term challenges and capitalize on long-term opportunities, particularly in AI and cloud services.

The 8% stock price drop presents a potential buying opportunity for those with a long-term horizon. However, short-term traders should proceed cautiously, as volatility may persist until Q3 results provide more clarity. Ultimately, Amazon’s scale, innovation, and market leadership make it a compelling investment for those willing to weather near-term uncertainties.

Always align your investment decisions with your financial goals and risk tolerance, and consider consulting a financial advisor. With its diversified business model and focus on emerging technologies, Amazon remains a cornerstone of the tech sector, making the question should you buy Amazon stock after earnings? one worth answering with confidence.

Disclaimer: Moneyjack.in provides general financial information for educational purposes only. We are not financial advisors. Content is not personalized advice. Consult a qualified professional before making financial decisions. We are not liable for any losses or damages arising from the use of our content. Always conduct your own research.