ii view: Amazon proves it’s an AI winner
Now run by the former AWS head and with the shares underperforming tech rivals so far in 2025. Buy, sell, or hold?
31st October 2025 15:25
by Keith Bowman from interactive investor
The company’s logo on an Amazon Logistics building in Antwerp. Photo: JONAS ROOSENS/BELGA MAG/AFP via Getty Images.
Third-quarter results to 30 September
- Net sales up by 13% to $180.2 billion (£137 billion) year-over-year
- Earnings per share of $1.95, up from $1.43 per share
Guidance:
- Expects Q4 sales of between $206 billion and $213 billion, giving year-over-year growth of 10-13%
- Operating income expected to be between $21 billion and $26 billion, compared with $21.4 billion in Q4 2024
Chief executive Andy Jassy said:
“We continue to see strong momentum and growth across Amazon as AI drives meaningful improvements in every corner of our business.
“Amazon Web Services (AWS) is growing at a pace we haven’t seen since 2022. In Stores, we continue to realize the benefits of innovating in our fulfilment network, and we’re on track to deliver to Prime members at the fastest speeds ever again this year."
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ii round-up:
Amazon.com Inc (NASDAQ:AMZN) delivered sales and profits that beat Wall Street hopes, driven by stronger-than-expected growth at its AWS cloud data business which hosts increasingly AI focused software for customers such as financial services providers.
AWS sales for the third quarter to late September were up 20% versus a year ago at $33 billion, topping estimates for an 18% increase, although still behind gains of 34% and 40% for fellow cloud data hosting rivals Google Alphabet and Microsoft. AWS profits climbed almost 10% to $11.4 billion, accounting for three-fifths of total profit.
Shares in the Nasdaq 100 company soared 10% having come into these latest results little changed so far in 2025. Alphabet Inc Class A (NASDAQ:GOOGL) and Microsoft Corp (NASDAQ:MSFT) are up 49% and 25% respectively. The Nasdaq 100 index has gained 22% year-to-date.
Group-wide sales for the quarter climbed 13% to $180.2 billion including gains of 11% and 14% respectively for Amazon’s two retail segments North America and International.
Third-quarter earnings of $1.95 per share was up from $1.43 a year ago, beating Wall Street forecasts of $1.57 per share.
Amazon, which recently announced job losses following overexpansion during the pandemic, raised expected 2025 capital expenditure to $125 billion from $118 billion. Management expects even bigger spending next year.
Amazon expenditure over the last year has included infrastructure to generate 3.8 gigawatts needed to power increasing numbers of datacentres hosting AI software. Job cuts of 4% of its workforce are likely to be focused across retail operations.
The tech titan expects sales growth for the fourth quarter to late December of up to 13%, generating potential sales of $213 billion.
Broker Morgan Stanley reiterated its ‘overweight’ stance on Amazon post the results, flagging the company as a ‘top pick’ and raising its target price to $315 per share from $300.
ii view:
Founded in 1994 by Jeff Bezos, Amazon is today headed by former AWS boss Andy Jassy. As well as smart speaker brand Alexa, others include Prime TV which competes against rivals such as Netflix Inc (NASDAQ:NFLX) and The Walt Disney Co (NYSE:DIS), and Fire tablets up against the likes of Apple. Geographically, the group's home US market leads with 68% of 2024 sales, with Germany, the UK and Japan other key markets with sales of around 5% each.
For investors, intense competition in the cloud space also includes the likes of IBM and Oracle. Unfinished trade talks between the US and China could yet see Trump tariffs raising the cost of goods imported from China. Government concerns regarding big-tech dominance have not gone away, while high borrowing costs continue to place pressure on disposable consumer income.
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More favourably, investment in AI services continues, with the popularity of its Alexa devices offering interesting potential. The previous launch of the group’s Rufus AI-aided chatbot is aimed at improving sales for retail, with similar potential likely for advertising. Diversity of business type and geographical locations exists, while brands such as Nike are looking to use Amazon as an alternative online store to their own website offering.
On balance, and despite continued risks, strong market share in what are now highly established global businesses are likely to see investors remain optimistic about the long term.
Positives
- Dominant position in online retailing
- Pushing AI initiatives and investments
Negatives
- Government concerns for monopolistic powers
- Currency movements can hinder performance
The average rating of stock market analysts:
Buy
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