Amazon earnings preview: Fiscal Q2 2025

Earnings preview

According to Visible Alpha consensus, Amazon.com, Inc. (NASDAQ: AMZN) total revenues expected for Q2 have remained stable at $162.2 billion, driven by continued resilience in Amazon’s online retail and AWS businesses. Consensus expectations for AWS expectations have remained around $30.7 billion. The focus will likely be on the Q2 performance and H2 outlook for the online retail and AWS margins and their impact on EPS. The tariff issues continue to present challenges to the outlook.

The North America retail operating margin has increased significantly from a meager 1.1% at the beginning of last year to an estimated 5.98% for Q2. Operating margin expectations for North America have edged higher since last quarter but are lower than the 6.7% margin initially targeted after Q4. For Q2 2025, the estimated margin for North America ranges from 4.5% to 7.7%, suggesting debate about the impact from tariffs on margins.

The Q2 International margin has moved higher from negative estimate last quarter to 1.5%, due to the downward pressure on the US dollar and debate about the tariff impact. In addition, the range of margin estimates have expanded significantly. For Q2 2025, the estimated international margin ranges from -4.4% to 5.9%, suggesting different views about the impact from tariffs and exchange rates on margins.

Last quarter, the company highlighted the poor visibility in their environment beyond July. The Management commentary for this quarter will be critical for understanding the back-to-school and holiday sales seasons both in North America and overseas.

AWS margin came in at 39% last quarter, and for Q2, is expected to drop down to 35% quarter-over-quarter. There is, however, a significant range of estimates for the Q2 AWS margin into next week’s release, with analysts expecting from 28% to 39%. For the FY 2025, consensus is 37% and ranges from 34% to 39%. With Alphabet recently increasing their capex guidance to $85 billion, there are questions about whether Amazon will do the same.

The stock has traded up 22.1% since early May but is down -2.8% since February. The consensus P/E for 2026 is 32x. Could the Q2 release provide the next positive catalyst for the stock?