Amazon Earnings: AWS Is Booming, E-Commerce Is Resilient, and Guidance Is Positive

Key Morningstar Metrics for Amazon

• Fair Value Estimate
  : $280
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : Medium

What We Thought of Amazon’s Earnings

Amazon AMZN reported first-quarter results that beat the high end of guidance on both the top and bottom lines. Revenue grew 15% year over year in constant currency to $181.5 billion, while operating margin was 13.1% versus 11.8% a year ago.

Why it matters: Overall results are positive, as consumer spending remains stable, the expansion of grocery and same-day delivery continues to drive demand, and artificial intelligence supports surging AWS growth. Further, profitability is impressive against various profitability headwinds.

• All segments were ahead of our model, with physical stores slightly light. Online stores, third-party seller services, and AWS were each more than $1 billion above expectations. We do not see any areas of concern with demand and believe the results support our positive long-term view on Amazon.
• Operating income was $23.9 billion with a margin of 13.1%, compared with the high end of guidance at $21.5 billion. Ramping up Leo costs, tariffs, massive data center expansion, and conflicts in Ukraine and the Middle East could have hampered results, but did not have a meaningful impact.

The bottom line: We raise our fair value estimate for wide-moat Amazon to $280 from $260 previously. Good results were matched by sound guidance, which led to our estimates being raised for both sales and operating income. Shares have bounced 25% in the last month, so we now see shares as fairly valued.

• AWS was strong, with growth accelerating to 28% year over year, and is now at a $150 billion annual run rate. The surging demand spans both traditional and artificial intelligence workloads and clearly supports management’s massive capital investment plans.

Coming up: The outlook for second-quarter revenue and profitability was better than expected. The midpoint of guidance calls for revenue of $196.5 billion and operating profit of $22 billion. Prime Day will fall in the second quarter of 2026, which we think boosts guidance.