Amazon.com Q1 2025 Earnings Report

Amazon.com EPS Results

• Actual EPS: $1.59
• Consensus EPS: $1.38
• Beat/Miss: Beat by +$0.21
• One Year Ago EPS: $0.98

Amazon.com Revenue Results

• Actual Revenue: $155.67 billion
• Expected Revenue: $154.96 billion
• Beat/Miss: Beat by +$704.10 million
• YoY Revenue Growth: +8.60%

Amazon.com Announcement Details

• Quarter: Q1 2025
• Date: 5/1/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 1, 2025
• Conference Call Time: 5:00PM ET

Amazon.com (NASDAQ:AMZN) is a global technology and e-commerce company that operates online marketplaces and provides a broad range of consumer products and services. Its retail business sells merchandise directly to customers and enables third-party sellers to offer products through Amazon’s websites and applications. The company also operates physical stores and provides services such as digital content, subscriptions, and consumer devices, including Kindle and Echo products.

Amazon Web Services (AWS) provides cloud computing, storage, database, analytics, artificial intelligence, machine learning, and other technology services to businesses, governments, and organizations. Amazon also generates revenue from digital advertising and offers subscription services, including Prime, which provides benefits such as expedited shipping, video and music streaming, and other member features.

Founded by Jeff Bezos in 1994 as an online bookseller, Amazon has expanded into a diversified global company serving customers in numerous countries. The company is led by President and Chief Executive Officer Andy Jassy, while Jeff Bezos serves as Executive Chair. Amazon’s operations include North American and international retail businesses, AWS, advertising, logistics, and other technology and content initiatives.

Amazon.com Q1 2025 Earnings Call Transcript

Key Takeaways

• Amazon reported Q1 revenue of $155.7 billion (up 10% YoY ex-FX) and operating income of $18.4 billion (up 20% YoY), with trailing twelve-month free cash flow at $25.9 billion.
• The company set new delivery speed records by regionalizing its fulfillment network, redesigning its inbound architecture, and expanding same-day and rural delivery stations to boost efficiency and lower costs.
• Amazon is preparing for potential import tariffs by forward-buying inventory and leveraging its broad seller base, noting everyday essentials represent one-third of US units sold, but uncertainty remains around timing and impact.
• Amazon Ads grew 19% YoY to $13.9 billion in revenue, driven by full-funnel advertising solutions across retail, entertainment properties, live sports, audio, and third-party exchanges.
• AWS revenue climbed 17% YoY to a $117 billion annual run rate, fueled by continued cloud migrations and aggressive investments in AI infrastructure, custom chips (Trainium 2), Bedrock foundation models, and agentic applications.

Presentation

[Operator]

Thank you for standing by. Good day, everyone, and welcome to the Amazon.com First Quarter 2025 Financial Results Teleconference. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. Today's call is being recorded, and for opening remarks, I will be turning the call over to the Vice President of Investor Relations, Mr. Dave Fildes. Thank you, sir. Please go ahead.

[Dave Fildes, VP of Investor Relations at Amazon.com]

Hello, and welcome to our Q1 2025 Financial Results Conference call. Joining us today to answer your questions is Andy Jassy, our CEO, and Brian Olsavsky, our CFO. As you listen to today's conference call, we encourage you to have a press release in front of you, which includes our financial results, as well as metrics and commentary on the quarter. Please note, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2024. Our comments and responses to your questions reflect management's views as of today, May 1, 2025 only, and will include forward-looking statements. Actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in today's press release and our filings with the SEC, including our most recent annual report on Form 10-K and subsequent filings.

[Dave Fildes, VP of Investor Relations at Amazon.com]

During this call, we may discuss certain non-GAAP financial measures in our press release, slides accompanying this webcast, and our filings with the SEC, each of which is posted on our IR website. You will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures. Our guidance incorporates the order trends that we've seen to date and what we believe today to be appropriate assumptions. Our results are inherently unpredictable and may be materially affected by many factors, including fluctuations in foreign exchange rates, changes in global economic and geopolitical conditions, tariff and trade policies, and customer demand and spending, including the impact of recessionary fears, inflation, interest rates, regional labor market constraints, world events, the rate of growth of the internet, online commerce, cloud services, and new and emerging technologies, and the various factors detailed in our filings with the SEC.

[Dave Fildes, VP of Investor Relations at Amazon.com]

Our guidance assumes, among other things, that we do not conclude any additional business acquisitions, restructurings, or legal settlements. It is not possible to accurately predict demand for our goods and services, and therefore our actual results could differ materially from our guidance. I will now turn the call over to Andy.

[Andy Jassy, CEO at Amazon.com]

Thanks, Dave. Today we're reporting $155.7 billion in revenue, up 10% year-over-year, excluding the impact from foreign exchange rates. Operating income is $18.4 billion, up 20% year-over-year, and trailing 12-month free cash flow is $25.9 billion. We're pleased with our continued business progress, but more importantly, with our pace of innovation and additional improvement in our customer experiences. In our stores business, we once again saw strong consumer resonance in our continued work on selection, value, and shipping speed. Our broad selection offers customers choice across their shopping journeys. We welcome well-known brands such as Oura Rings, Michael Kors, and The Ordinary, as well as a new shopping experience with Saks that offers a refined luxury assortment of fashion and beauty items from brands like Dolce & Gabbana, Balmain, Burberry, Giambattista Valli, and Jason Wu Collection.

[Andy Jassy, CEO at Amazon.com]

As always, we're working to keep prices low, and with this being an uncertain moment for consumers, it's even more important than it typically is. In Q1, we held deal events worldwide to help customers save over $500 million across the Big Spring Sale in the U.S. and Canada, Spring Deal Days in Europe, and Ramadan Eid Sale events in Egypt, Saudi Arabia, Turkey, and the UAE. Prime members will have more opportunities to save throughout the year, including at our 11th Prime Day event in July. Over the past-few-years, we've made significant progress in making our fulfillment network more efficient and cost-effective. We've shared many times that an important turning point was regionalizing our national fulfillment network into regional hubs. By stocking items closer to where customers live, we're able to deliver more orders faster, often in fewer packages and at lower delivery costs.

[Andy Jassy, CEO at Amazon.com]

The next challenge was getting as many items as possible into these regional nodes. Our inbound network, which is how we get items to each fulfillment center, had not been architected to leverage this new regionalization structure, so we redesigned it and just rolled out a new inbound architecture that expands the share of products that we can place in each fulfillment center, improving delivery speeds and lowering our cost to serve. In the first quarter, we once again set new delivery speed records with our fastest delivery ever for Prime members around the world, and we delivered more items in the same day or next day in Q1 than any other quarter in our history. Looking ahead, we will continue to refine our newly redesigned inbound network, build out our same-day delivery sites, and add additional robotics and automation throughout our buildings.

[Andy Jassy, CEO at Amazon.com]

You'll also see us expand the number of delivery stations that we have in rural areas of the U.S. so we can get items to people who live in less densely populated areas much more quickly. I thought I'd share a few thoughts on the prospect of heightened tariffs on our stores business. Obviously, none of us knows exactly where tariffs will settle or when. We haven't seen any attenuation of demand yet. To some extent, we've seen some heightened buying in certain categories that may indicate stocking up in advance of any potential tariff impact. We also have not seen the average selling price of retail items appreciably go up yet.

[Andy Jassy, CEO at Amazon.com]

Some of this reflects some forward buying we did in our first-party selling, and some of that reflects some advanced inbounding our third-party sellers have done, but a fair amount of this is that most sellers just have not changed pricing yet. Again, this could change depending on where tariffs settle. Amazon is not uniquely susceptible to tariffs. As it relates to China, retailers who are not buying directly from China are typically buying from companies who themselves are buying from China, marking these items up, rebranding, and selling to U.S. consumers. These retailers are buying the product at a higher price than Chinese sellers selling directly to U.S. consumers in our marketplace, so the total tariff will be higher for these retailers than for China direct sellers. It is also sometimes easy to forget what Amazon sells. We are not mostly selling high average selling price items, though we certainly sell a bunch.

[Andy Jassy, CEO at Amazon.com]

In the first quarter, our everyday essentials grew more than twice as fast as the rest of our business and represented one out of every three units sold in the U.S. on Amazon. Even if you exclude Whole Foods Market and Amazon Fresh, Amazon is one of the largest grocers in the U.S. with over $100 billion in gross sales last year. People are buying a lot of their everyday essentials at Amazon. We also have an extremely large selection, hundreds of millions of unique SKUs, which means we're often able to weather challenging conditions better than others. When there are periods of discontinuity, substantial unexpected product trends emerge. Think about the pandemic, when items like masks and hand sanitizer became big sellers.

[Andy Jassy, CEO at Amazon.com]

When you have the broadest selection like we do and 2 million plus global sellers like we do, you're better positioned to help customers find whatever items matter to them at lower price points than elsewhere. Finally, when there are uncertain environments, customers tend to choose the provider they trust most. Given our really broad selection, low pricing, and speedy delivery, we have emerged from these uncertain eras with more relative market segment share than we started and better set up for the future. I'm optimistic this could happen again. Moving to a few words on Amazon ads. We're working hard to be the best place for brands of all sizes to grow their business. We are pleased with the strong growth on a very large base, generating $13.9 billion of revenue in the quarter and growing 19% year-over-year.

[Andy Jassy, CEO at Amazon.com]

We're seeing strength across our broad portfolio of full-funnel advertising offerings that help advertisers reach an average ad-supported audience of more than 275 million in the U.S. alone. This includes our top-of-funnel efforts to drive brand awareness, the bottom-of-funnel offerings where we measure outcomes at the point of conversion. Amazon ads provides brands with tools to reach targeted audiences in our own entertainment properties such as Prime Video, Twitch, and IMDb, in live sports such as NFL, NBA, and NASCAR, audio content such as Amazon Music and Wondery, and of course in our store, as well as many other external sites such as Pinterest and BuzzFeed.

[Andy Jassy, CEO at Amazon.com]

All of our audience and measurement capabilities work for the ads we deliver across premium third-party publishers through Amazon DSP, and our secure clean rooms provide advertisers the ability to analyze data, produce core marketing metrics, and understand how their marketing performs across various channels. We continue to see a lot of opportunity to further expand our full-funnel capabilities for brands. AWS grew 17% year-over-year in Q1 and now sits at a $117 billion annualized revenue run rate. We continue to help organizations of all sizes accelerate their move to the cloud, helping to modernize their infrastructure, lower costs, and speed up innovation. We signed new AWS agreements with companies including Adobe, Uber, Nasdaq, Ericsson, Fujitsu, Cargill, Mitsubishi Electric Corporation, General Dynamics Information Technology, GE Vernova, Booz Allen, Hamilton, NextEra Energy, Publicis Sapient, Elastic, NetSmart, and many others.

[Andy Jassy, CEO at Amazon.com]

It's useful to remember that more than 85% of the global IT spend is still on premises, so not in the cloud yet. It seems pretty straightforward to me that this equation will flip in the next 10 years-20 years. Before this generation of AI, we thought AWS had the chance to ultimately be a multi-hundred billion dollar revenue run rate business. We now think it could be even larger. If you believe your mission is to make customers' lives easier and better every day, and you believe that every customer experience will be reinvented with AI, you're going to invest very aggressively in AI, and that's what we're doing. You can see that in the thousand-plus AI applications we're building across Amazon. You can see that with our next generation of Alexa named Alexa Plus.

[Andy Jassy, CEO at Amazon.com]

You can see that in how we're using AI in our fulfillment network, robotics, shopping, Prime Video, and advertising experiences. You can see that in the building blocks AWS is constructing for external and internal builders to build their own AI solutions. We're not dabbling here. We're very intentionally giving builders the broadest possible capabilities at every level of the AI stack cost-effectively to use AI expansively across their businesses. At the bottom layer for those building models, our new custom AI chip, Trainium 2, is starting to lay in capacity in larger quantities with significant appeal and demand. While we offer customers the ability to do AI in multiple chip providers and will for as long as I can foresee, customers doing AI at any significant scale realize that it can get expensive quickly.

[Andy Jassy, CEO at Amazon.com]

The 30%-40% better price performance that Trainium two offers versus other GPU-based instances is compelling. For AI to be as successful as we believe it can be, the price of inference needs to come down significantly. We consider this part of our mission and responsibility to help make it so. At the middle layer for those wanting to leverage frontier models to build generative AI apps, Amazon Bedrock is our fully managed service that offers a choice of high-performing foundation models with the most compelling set of features that make it easy to build high-quality generative AI applications. We continue to iterate quickly on Bedrock, adding Anthropic's Claude 3.7 Sonnet hybrid reasoning model, their most intelligent model to date, and Meta's Llama 4 family of models.

[Andy Jassy, CEO at Amazon.com]

We were also the first cloud service provider to make DeepSeek R1 and Mistral AI's Pixtral Large generally available as a fully managed model. Of course, we offer our own Amazon Nova state-of-the-art foundation models in Bedrock with the latest premier model launching yesterday. They deliver frontier intelligence and industry-leading price performance, and we have thousands of customers already using them, including Slack, Siemens, Sumo Logic, Coinbase, FanDuel, Glean, and Blue Origin. A few weeks ago, we released Amazon Nova Sonic, a new speech-to-speech foundation model that enables developers to build voice-based AI applications that are highly accurate, expressive, and human-like. Nova Sonic has lower word error rates and higher win rates over other comparable models for speech interactions. The technology world is also abuzz about the potential of agents. To date, virtually all of the agentic use cases have been of the question-answer variety.

[Andy Jassy, CEO at Amazon.com]

Our intention is for agents to perform wide-ranging, complex, multi-step tasks like organizing a trip or setting the lighting, temperature, and music ambience in your house for dinner guests, or handling complex IT tasks to increase business productivity. There have not been action-oriented agents like this until Alexa Plus, but the technology to build these agents is still quite primitive and accurate and requires constant human supervision. We have just released a research preview of Amazon Nova Act, a new AI model trained to perform actions within a web browser. It enables developers to break down complex workflows into reliable atomic commands like search or checkout or answer questions about the screen. It also enables them to add more detailed instructions to these commands where needed, like do not accept the insurance upsell.

[Andy Jassy, CEO at Amazon.com]

Nova Act aims to move the current state-of-the-art accuracy on multi-step agentic actions from 30%-60% to 90 plus percent with the right set of building blocks to build these action-oriented agents. At the very top of the stack are the applications. This past quarter, Amazon Q, the most capable generative AI-powered assistant for accelerating software development and leveraging your own data, launched a lightning-fast new agentic coding experience within the command line interface that can execute complex workflows autonomously. Customers are loving this. We also made generally available GitLab Duo with Amazon Q, enabling AI agents to assist multi-step tasks such as new feature development, code-based upgrades for Java 8 and 11, while also offering code review and unit testing, all within the same familiar GitLab platform.

[Andy Jassy, CEO at Amazon.com]

Our AI business has a multi-billion dollar annual revenue run rate, continues to grow triple-digit year-over-year percentages, and is still in its very early days. While there is good reason for the high optimism about AI, I conclude my AWS comments with a reminder that there is still so much on-premises infrastructure yet to be moved to the cloud. Infrastructure modernization is much less sexy to talk about than AI, but fundamental to any company's technology and invention capabilities, developer productivity, speed, and cost structure. If we're companies to realize the full potential of AI, they're going to need their infrastructure and data in the cloud. I want to briefly mention a few other items.

[Andy Jassy, CEO at Amazon.com]

As I've referenced a couple of times in Q1, we introduced Alexa Plus, our next-generation Alexa personal assistant who's meaningfully smarter and more capable than her prior self, can both answer virtually any question and take actions, and is free with Prime or available to non-Prime customers for $19.99 a month. We're just starting to roll this out in the U.S., and we'll be expanding to additional countries later this-year. People are really liking Alexa Plus this far. We're excited and honored to be part of the joint venture that will be creating the next generation of the esteemed James Bond film franchise. We recently named acclaimed producer Amy Pascal and David Heyman to produce the next James Bond movie.

[Andy Jassy, CEO at Amazon.com]

Additionally, just a couple of days ago, Project Kuiper reached a significant milestone by launching our first satellites into orbit, with more being launched soon, and we expect to begin offering service to customers later this year. I'm proud of what our teams around the world have delivered. We're excited about what we're inventing and working on as we speak, and with that, I'll turn it over to Brian for a financial update.

[Brian Olsavsky, CFO at Amazon.com]

Thanks, Andy. I will begin with our top-line financial results. Worldwide revenue was $155.7 billion, a 10% increase year-over-year, excluding the impact of foreign exchange. This equates to a $1.4 billion headwind from foreign exchange year-over-year in the quarter. Worldwide operating income was $18.4 billion, approximately $400 million above the high end of our guidance range.

[Brian Olsavsky, CFO at Amazon.com]

These results include one-time charges that impacted North America and international operating income that I will discuss in a moment. First, let's start with the net sales results for these segments. In the North America segment, first-quarter revenue was $92.9 billion, an increase of 8% year-over-year. Our international segment revenue was $33.5 billion, also an increase of 8% year-over-year, excluding the impact of foreign exchange. Worldwide paid units grew 8% year-over-year. Our priority is to provide value to our customers across our businesses. In the first quarter, we held multiple deal events around the world, which drove strong customer engagement. We saw broad-based strengths across our key business inputs, including record delivery speeds for Prime members, enabled by improved inventory placement. Our vast selection gives customers choice across various price points, particularly in categories like grocery, which includes everyday essentials.

[Brian Olsavsky, CFO at Amazon.com]

These are the items that people purchase most frequently. We partner with millions of independent sellers from around the world. These selling partners are important contributors to our broad selection, and worldwide third-party seller unit mix was 61% in Q1, consistent with Q1 of last-year. Shifting to profitability, North America segment operating income was $5.8 billion, and international segment operating income was $1 billion, with operating margins of 6.3% in North America and 3% internationally. As I mentioned earlier, during the quarter, we recorded one-time charges related to some historical customer returns that have not yet been resolved, and some costs to receive inventory that was pulled forward into Q1 ahead of anticipated tariffs. Without these charges, North America and international operating margins would have been approximately 90 basis points and 70 basis points higher, or operating margins of 7.2% for North America and 3.7% for international.

[Brian Olsavsky, CFO at Amazon.com]

We are pleased with how our teams continue to execute and deliver for customers. In Q1, our newly re-architected inbound network drove productivity in our fulfillment and transportation network, leading to better inventory placement and higher units per package, and as a result, lower delivery costs. Beyond Q1, we have a number of initiatives underway to continue improving our cost structure, such as fine-tuning our inbound network, building out our same-day delivery sites, expanding our rural delivery network, and adding robotics and automation to our facilities. Better inventory placement remains a top priority. Better placement drives more in-stock selection, reduces travel distances, and speeds up delivery. Having the inventory in the right place at the right time increases the likelihood that multiple items can be combined in a package, which helps reduce packaging and costs.

[Brian Olsavsky, CFO at Amazon.com]

Although progress will not always be linear, we have a good plan to continue to drive improvement over time. Shifting to advertising. Advertising remains an important contributor to profitability in the North America and international segments. Advertising revenue grew 19% year-over-year. We are pleased with the accelerating growth on an increasingly large base. We are seeing strong adoption across our full-funnel advertising offering as brands appreciate our ability to connect them with customers. We will also continue to invest in other long-term opportunities. These efforts have the potential to be important to customers and Amazon in the future, including Kuiper, where we had our first launch of our production design satellites earlier this week, and we will be launching more satellites throughout the year. We are closely monitoring the macroeconomic environment, including the impact of tariffs. We are planning for various outcomes, and we have taken a number of actions to protect the customer experience.

[Brian Olsavsky, CFO at Amazon.com]

We're doing everything we can to keep our prices low for customers and in a way that makes economic sense. Moving next to our AWS segment, revenue was $29.3 billion in Q1, an increase of 17% year-over-year. AWS now has an annualized revenue run rate of more than $117 billion. During the first quarter, we continue to see growth in both generative AI business and non-generative AI offerings. As companies turn their attention to newer initiatives, bring more workloads to the cloud, restart or accelerate existing migrations from on-premises to the cloud, and tap into the power of generative AI. AWS operating income was $11.5 billion and reflects our continued growth, coupled with our focus on driving efficiencies across the business.

[Brian Olsavsky, CFO at Amazon.com]

As we've said before, we expect AWS operating margins to fluctuate over time, driven in part by the level of investments we're making at any point in time. We plan to bring on an increasing amount of capacity in the back half of the year. Now turning to our cash CapEx, which was $24.3 billion in Q1. The majority of this spend is to support the growing need for technology infrastructure. It primarily relates to AWS as we invest to support demand for our AI services and increasingly in custom silicon like Trainium, as well as tech infrastructure to support our North America and international segments. We're also investing in our fulfillment and transportation network to support future growth and improve delivery speeds and our cost structure. This investment will support growth for many-years to come.

[Brian Olsavsky, CFO at Amazon.com]

While we primarily focus our comments on operating income, I'd like to point out that our first-quarter net income of $17.1 billion includes a pre-tax gain of $3.3 billion included in non-operating income, and it relates to our investment in Anthropic. This activity is not related to Amazon's ongoing operations, but rather the result of the conversion of a portion of our convertible notes to non-voting preferred stock. Turning to Q2 guidance. As a reminder, our guidance considers a range of possibilities and takes into account Q1 results, trends in quarter-day results, and expectations around the macroeconomic environment. Q2 net sales are expected to be between $159 billion and $164 billion. We estimate the year-over-year impact of changes in foreign exchange rates based on current rates, which we expect to be a headwind of approximately 10 basis points in the quarter.

[Brian Olsavsky, CFO at Amazon.com]

As a reminder, global currencies can fluctuate during the quarter. Q2 operating income is expected to be between $13 billion and $17.5 billion. This estimate includes the impact of our seasonal step-up in stock-based compensation expense in Q2, driven by the timing of our annual compensation cycle. The external environment remains complex, and as we have done throughout our history, we are focused on the inputs that we can control to protect the customer experience. We will work hard to remain the place customers trust for sharp prices, broad selection, and convenience. We'll remain focused on driving a better customer experience, and we still believe putting customers first is the only reliable way to create lasting value for our shareholders. With that, let's move on to your questions.

[Operator]

Thank you. At this time, we will now open the call up for questions. We ask each caller to please limit yourself to one question. If you would like to ask a question, please press star one on your keypad. We ask that when you pose your question, you pick up your handsets to provide optimum sound quality. Once again, to initiate a question, please press star, then one on your touchstone telephone at this time. Please hold while we pull for questions. The first question comes from the line of Ross Sandler with Barclays. Please proceed with your question.

[Ross Sandler, Analyst at Barclays]

Great. I think I'm going to leave the China questions to others and focus on AWS and kind of AI. Andy, it seems like you've been bringing on a lot more P5 GPU instances since February from what it looks like to kind of support all these new AI workloads. How would you characterize in the first quarter and maybe here in the second quarter the kind of supply-demand imbalance that you talked about before around AI workloads? When do you think that AWS will be in a position to kind of capture enough AI revenue to drive acceleration? Is that something that could happen this year, or do you see that more like next year given your capacity constraints? Thank you very much.

[Andy Jassy, CEO at Amazon.com]

Thanks, Ross. You know, I would say that we've been bringing on a lot of P5s, which is a form of NVIDIA chip instances, as well as landing more and more Trainium 2 instances as fast as we can. I would tell you that, you know, our AI business right now is a multi-billion dollar annual run rate business. It's growing triple-digit percentage year-over-year.

[Andy Jassy, CEO at Amazon.com]

As fast as we actually put the capacity in, it's being consumed. You know, I think we could be helping more customers and driving more revenue for the business if we had more capacity. We have a lot more Trainium 2 instances and the next generation of NVIDIA's instances landing in the coming months. I expect that, you know, there are other parts of the supply chain that are a little bit jammed up as well, you know, motherboards and some other componentry. I do think—and some of that is just because there is so much demand right now—but I do believe that the supply chain issues and the capacity issues will continue to get better as the year proceeds.

[Operator]

The next question comes from the line of Eric Sheridan with Goldman Sachs. Please proceed with your question.

[Eric Sheridan, Managing Director at Goldman Sachs]

Thanks so much for taking the question. Maybe I could ask a two-parter. First, in terms of strategy, you know, Andy, how do you think about positioning the company for the medium term with given all the levels of uncertainty out there about how the global trade environment might shift in the coming months? What do you see as the key strategic priorities that will allow the company to sort of be able to capitalize one way or another depending on various elements of outcome? How do you prioritize those investments in the months ahead? With respect to the one-quarter forward operating income guide, is there anything in there from a cost side that we should be thinking about as purely aligned with those types of investments against the trade landscape that might not repeat either later into this year or next year? Thanks so much.

[Andy Jassy, CEO at Amazon.com]

Thanks, Eric. You know, it's hard to tell what's going to happen with tariffs right now. It's hard to tell where they're going to settle and when they're going to settle. A lot of what we're thinking about short and medium term actually turns out to be what we think about long term too, which is how do we actually have the broadest possible selection for customers at the lowest possible prices? There's maybe never been a more important time in recent memory than, you know, trying to keep prices low, which we're heads down, pretty maniacally focused on, and then get things to people quickly and take care of customers. That is the heart of what we're doing. You can see different initiatives that we've taken within those priorities. We've done some forward buys of inventory where we're the first-party seller.

[Andy Jassy, CEO at Amazon.com]

Our third-party sellers have pulled forward a number of items so that they have inventory here as well. Those are all, you know, we're encouraging that because we're trying to keep prices as low as possible for customers. I think also when you have as broad a selection as we have, and we have much broader selection than other retailers, it means that when you've got this continuity like we may potentially have, you're better able to help customers find what they want no matter what those trends are. I mentioned in my opening comments about what happened in the pandemic, and you can bet there are going to be things that we don't anticipate that customers really value and want that are different.

[Andy Jassy, CEO at Amazon.com]

It could be as simple, by the way, as just favoring other brands that maybe people did not know about before, but where they have a more favorable price equation for customers. I think when you have also got—another thing that people forget is that when you have got 2 million plus sellers, they are not all going to take the same strategy if there ends up being higher tariffs. I mean, there are going to be plenty of sellers that decide to pass on those higher costs to end consumers, but they are going to—you know, we have a lot of sellers in lots of different countries, and not all of them are going to pursue the same tack.

[Andy Jassy, CEO at Amazon.com]

I think when you've got larger diversity like we have, we have a better chance of some of those sellers deciding that they're going to capture share, and they're not going to pass on all or any of those tariffs to customers. I think customers are going to have a better chance of finding variety on selection and on lower prices when they come here. You know, the last thing I would say is that we have been in a number of our businesses, but just I'd say over the last six years or so, we have been diversifying where we produce things over a long period of time.

[Andy Jassy, CEO at Amazon.com]

We had a, I would say, a meaningfully higher concentration of where we produced components for AWS or devices in China than we have now, where we've diversified meaningfully over that time, and we just thought that was wise to do so. Those are some of the ways that we're trying to make sure that we are protecting our customers over the short, medium, and long term. It turns out that most of those are the things that we focus most on, which is really broad selection for ultimate choice, really low prices, and very fast delivery.

[Brian Olsavsky, CFO at Amazon.com]

Eric, I'll take your question on the guidance and especially on operating income. I think that was your question in the cost that might be in Q2. The thing I'd point to again is what I mentioned earlier.The stock-based comp always steps up generally in Q2 versus Q1 and then resets a rate that carries through for the next four quarters. You can look at historic trends to get an idea of that. Secondly, we do have some additional Kuiper launch costs in Q2. You saw a launch happen this week. A reminder that we expense those launch costs until the point of commercialization, which the plan is to have that be later in this-year.

[Operator]

Thank you. The next question comes from the line of Justin Post with Bank of America. Please proceed with your question.

[Justin Post, Managing Director at Bank of America]

Great. Thanks. I'll go back to AWS. I know in the past you said revenues can be lumpy. Can you explain why they might fluctuate up and down if it's beyond just capacity? You see the competitors, you know, with some pretty good growth rates. How do you think about the difference there? Obviously, your dollar growth is very good, but how do you think about the difference there versus some of your competitors? Thank you.

[Andy Jassy, CEO at Amazon.com]

You know, the first thing I would say is when we've historically said that revenue can be lumpy, this was, you know, we've been saying this well before what's happened with AI over the last couple of years. The reason for that is the sales cycle for, particularly for enterprises. It's true for startups. You know, what you really want is you want to have the type of capabilities where startups want to primarily choose to run on top of your platform. That's true. If you look in the startup space, you know, the vast majority of successful startups over the last 10 years-15 years have run on top of AWS.

[Andy Jassy, CEO at Amazon.com]

It's unpredictable when those startups are going to find product-market fit and grow substantially. It's, you know, it's hard for them to predict and even harder for us to predict. The same thing goes on the enterprise side, but in a different way, when the sales cycle on the enterprise side is that you spend time trying to convince people that they should move from on-premises to the cloud, and then that you have the right solution for them, and then you pick a set of projects that you get experience on. Sometimes they use systems integrators, sometimes they use our own professional services, sometimes they're doing it themselves. There's a next tranche of migrations. Those migrations just take time. Some companies get through them really quickly, and some companies take longer to get through them.

[Andy Jassy, CEO at Amazon.com]

What happens a lot of times too is that they get excited and enthusiastic about the cost advantages and the speed of innovation advantages they get moving to the cloud. What was supposed to be a smaller next tranche turns into a much larger next tranche. All of that has been true for a long time. It's very hard for us to predict because it really is contingent on what enterprises, how they want to sequence it and resource it. You throw in AI, which has its own very fast growth cycle, particularly in certain types of use cases. Those change. I mean, I'll give you just some examples. You know, in the early days of, you know, the earliest days, I should say, of AI, what you've seen the most amount of has been initiatives that get you productivity and cost avoidance.

[Andy Jassy, CEO at Amazon.com]

We've seen that from so many of our AWS customers. We're doing a lot of it ourselves inside of Amazon using AI. You've also seen, I would say, large-scale training, with a lot of those running on top of this as well. As you know, Anthropic is running their, you know, building their next few training models on top of our Trainium 2 chip on AWS. You've seen a couple really big chatbots. What you've seen just in the last few months is really kind of the explosion of coding agents. If you just look at the growth of these coding agents the last few months, these are companies like Cursor or Vercel, both of them run significantly on AWS. Just look at the growth of that over the last few months.

[Andy Jassy, CEO at Amazon.com]

You just couldn't have predicted that sort of growth. That's why it's lumpy. You know, sometimes you'll have, you know, very significant increases that you didn't predict and you couldn't forecast. You know, they'll grow at a good rate, but maybe not the same rate before the next big kind of explosive growth. I would tell you that everything I just mentioned with interesting in AI is that we still haven't gotten to all the other customer experiences that are going to be reinvented and all the other agents that are going to be built. They're going to take, you know, the role of a lot of different functions today.

[Andy Jassy, CEO at Amazon.com]

You know, those are, they're so, even though we have a lot of combined inference in those areas, I would say we're not even at the second strike of the first batter in the first inning. It is so early right now. I would just say on the how to think about relative growth rates, you always have to, you know, the year-over-year growth rate is really only a function of the percentage growth on the base with which you are operating from. We just have a very, you know, a meaningfully larger base on the technology infrastructure side than others. When, you know, it's still, you know, if you think about 17% year-over-year growth on a $117 billion revenue run rate, it's still pretty significant growth. As I said, I think we could be doing more if we had more capacity.

[Andy Jassy, CEO at Amazon.com]

I expect that to, you know, the capacity to ease in the coming months.

[Operator]

Thank you. Our next question comes from the line of Doug Anmuth with JP Morgan. Please proceed with your question.

[Doug Anmuth, Managing Director at JPMorgan]

Thanks for taking the questions. One for Brian, one for Andy. Brian, just maybe to follow up on AWS, but more on the margin side. We've seen a lot of fluctuation over the last couple of years and now hitting almost 40%. If you can just talk about what's driving the outperformance and then how we should think about normalized margins going forward. Andy, your comments on Alexa about moving to more complex tasks. Can you talk about that more? And just, you know, with Alexa, the products have been around for a long time, and they've had different use cases. How do you get users to shift their behavior more with Alexa? Thanks.

[Brian Olsavsky, CFO at Amazon.com]

Thanks, Doug. I'll take your first question. Yeah, we did a strong quarter in AWS, as you mentioned, the margin performance. I would attribute it to the strong growth that we're seeing, coupled with, you know, the impact of some continued investment we're making in innovation and technology. Give you some examples. You know, we invest in software and process improvements, and it ends up optimizing our server capacity, which helps our infrastructure costs. Been developing more efficient network using our low-cost custom networking gear. We're working to maximize the power usage in our existing data centers, which both lowers our costs and also reclaims power for other newer workloads. We're also seeing the impact of advancing custom silicon like Graviton. It provides lower costs not only for us, but also for our customers, the better price performance for them.

[Brian Olsavsky, CFO at Amazon.com]

You're right, margins are, you know, impacted by a lot of things, including our level of investment, competitive pricing, the mix of generative AI services as they're ramping up. We'll continue to evolve over the years to come. We do have a lot of investment in infrastructure going on and plan for the second half of the year. That will, you know, we'll start to see the impact of that. We're happy with the performance of the team with generating cost savings. It's a big focus as well as expanding the services and features for customers.

[Andy Jassy, CEO at Amazon.com]

On the Alexa question, we're really excited about Alexa Plus. You know, as I mentioned earlier, it is, she's much more intelligent, much more capable, and able to take real action.

[Andy Jassy, CEO at Amazon.com]

You know, today, most of the agents that have been out there have really just been able to answer questions, which, when it came out, was very remarkable. I think the future of agents is not just being intelligent, but also being able to take action. That actually requires a great model, but it also requires the ability to sync that model and to align that model with being able to take the right action and execute and implement the right APIs, or you can have very suboptimal results. We have worked hard on that in Alexa Plus. We have started rolling out over the last several weeks. It is now with over 100,000 users, with more rolling out in the coming months. So far, the response from our customers has been very, very positive.

[Andy Jassy, CEO at Amazon.com]

People are excited about it. I think that, you know, it does a lot more things than what Alexa did before. You know, we're very fortunate in that we have over a half billion devices out there in people's homes and offices and cars. We have a lot of distribution already. There will be, to some degree, a little bit of rewiring for people on what they can do because you get used to patterns. I mean, even the simple thing of not having to speak Alexa speak anymore, where we're all used to saying Alexa before we want every action to happen. What you find is you really only have to do it the first time. Then really the conversation is ongoing where you don't have to say Alexa anymore.

[Andy Jassy, CEO at Amazon.com]

I've been lucky enough to have, you know, the Alpha and the Beta that I've been playing with for several months. It took me a little bit of time to realize I didn't have to keep saying Alexa. It's very freeing when you don't have to do that. You know, I think it's just experience in trying things. You can do things like you have guests coming over on a Saturday night for dinner, and you can say, you know, Alexa, please open the shades, put the lights on in the driveway and on the porch, increase the temperature five degrees, and pick music that would be great for dinner that's mellow. She just does it. Like when you have those types of experiences, it makes you want to do more of it.

[Andy Jassy, CEO at Amazon.com]

You know, when I was in New York when we were announcing it, I asked her what were the, you know, we did the event way downtown. I asked her what were great Italian restaurants or pizza restaurants. She gave me a list. She asked me if she wanted me to make a reservation. I said yes. She made the reservation and confirmed the time. Like that, when you get into those types of routines and you have those types of experience, they're very, very useful. It is really like having a great personal assistant, which most people in the world don't have. I think that the more and more that people get used to it, they will realize what she can do. We're not going to be standing still.

[Andy Jassy, CEO at Amazon.com]

We have a lot more functionality that we plan to add in the coming months too.

[Operator]

Thank you. Our next question comes from the line of Brian Nowak with Morgan Stanley. Please proceed with your question.

[Brian Nowak, Managing Director at Morgan Stanley]

Thanks for taking my questions. Hey, Andy and Brian. I have one for each of you guys. Andy, you have a very complicated retail business with a lot of moving pieces to it. I imagine you have a lot of good data on what you expect demand to be over the course of the year and the holidays and things. As you kind of step back and analyze the business and the tariff uncertainty, can you just sort of walk us through the one or two key areas operationally that you're most focused on just to ensure that Prime Day, Thanksgiving, and the holidays go as smoothly as they possibly can?

[Brian Nowak, Managing Director at Morgan Stanley]

Then secondly, Brian, just to kind of go back to Eric's earlier question, as we think about the 2Q EBIT guide, are there any one-time costs or sort of tariff-related costs in there similar to that billion dollars that you called out in the first quarter? Thanks.

[Brian Olsavsky, CFO at Amazon.com]

Thanks, Brian. On the retail question, I would say that the areas that maybe we're most focused on to make sure we have, you know, not just a great Prime Day, but Prime Day is just one event, as you know, and so is Peak. We're trying to be great all year long for customers. The obvious ones are making sure that we help our sellers however we can, because there's uncertainty for our sellers as well. We're trying to make sure we provide a great experience.

[Brian Olsavsky, CFO at Amazon.com]

We're trying to make sure that we have the right diversity of sellers and low prices for our customers. I think all that you have to also be very thoughtful around how much inventory you bring into your fulfillment nodes at any one time. Because you can imagine scenarios where, you know, either on your own when you're the first-party seller or lots of third parties want to get as much inventory in as early as possible, you know, trying to beat a deadline on what may happen. If you end up with too much inventory in your fulfillment network, it really slows down your productivity and your ability to get things out as quickly as you want for customers at the cost structure you want. Being able to manage that thoughtfully, we've learned that over-the-years.

[Brian Olsavsky, CFO at Amazon.com]

I think the team is doing a really good job of balancing that right now. Brian, on your question about Q2, I guess I'll just reiterate what I had said earlier. You know, we had stock-based comp step up, which I think you can see the normal pattern for that if you look at our history. We have additional Kuiper expenses. Specifically, you asked about tariffs. We do have tariffs that we'll be paying on retail purchases based on current tariffs. It's not large in Q2. We had done a lot of pre-buying of inventory in Q1, as I mentioned earlier. You know, just generally, I think with the uncertainty, we've added a bit to the range that we've given you.

[Brian Olsavsky, CFO at Amazon.com]

We generally have a wide range, but just the general uncertainty that we're seeing and uncertainty of consumer demand and all the everything else is causing us to increase the ranges a bit. We'll see. We've filled some an informed view of Q2 right now. As Andy mentioned earlier, we saw actually some strength in April based on what could end up being some pre-buys of a number of things. Advertising has been strong. We think there's a lot of positive trends, but, you know, certainly uncertainty right now for the quarter.

[Operator]

Thank you. Our final question will come from the line of Brent Thill with Jefferies. Please proceed with your question.

[Brent Thill, Managing Director at Jefferies]

Thanks. On AWS, I'm curious if you could give us the backlog number. Andy, to your point about many of these core workloads still yet to come to cloud, can you just update us in what you're seeing? Are you seeing enterprise strength back? Are you seeing some confusion with AI clouding that transition and the timing of that? Just give us a perspective on what you're seeing on that migration. Thank you.

[Dave Fildes, VP of Investor Relations at Amazon.com]

Hey, this is Dave. I'll just jump in on the backlog and turn it over to Andy. The backlog is $189 billion for Q1. That's up about 20% year-over-year. And the weighted average remaining life on that is 4.1 years.

[Andy Jassy, CEO at Amazon.com]

On the AWS question, Brent, around what we're seeing on the workloads that haven't moved, you know, what I would say, the way I would characterize it is that we were on a very aggressive march that was methodical, but almost metronomic before the pandemic of enterprises deciding that they wanted to move off their on-premises infrastructure because of the speed of innovation, the developer productivity, and the cost advantages of the cloud. When you got into the pandemic and the economy looked uncertain in the second half of that couple of few years, you had everybody trying to cost optimize, including us, by the way. As we started to emerge from that trend, you saw generative AI explode. Everybody wanted to try to find a way to have a workload or a set of workloads there because people saw the potential.

[Andy Jassy, CEO at Amazon.com]

It was also something that was generating a lot of interest publicly. What we've seen now over the last, call it 16 months-18 months or so, is that enterprises realize they need to do both. They want to do AI. They have all sorts of pilots at this point on AI, many of which will be successful, others of which will not be successful. The ones that are successful will scale. They also have a lot more initiatives that they haven't, you know, that they still haven't gotten to on the AI side, either because they're building that skill set or they're picking a first set to get experience with, or as they're waiting to see the cost of inference continue to go down, which it will.

[Andy Jassy, CEO at Amazon.com]

I mean, you will not get the expansiveness that we all know is coming in AI until we keep getting the cost of inference down, even though it's growing like crazy right now. At the same time, I would say that we see an increased resurgence and understanding for enterprises that they are dropping the low-hanging fruit if they don't move their infrastructure to the cloud. They just, you know, for all the reasons I mentioned earlier. You're starting to see those plans pick up again. As I mentioned earlier to one of the questions, you don't decide that you're going to transform your infrastructure from on-premises to the cloud and see it happen in three months.

[Andy Jassy, CEO at Amazon.com]

You know, that is typically a multi-year process that some companies do it fast, some companies do it slower, but they do it in tranches and they do it thoughtfully because they can't afford for their applications not to work as they're making their transition. We're having meaningful success in those conversations and in companies choosing to transform their infrastructure on top of AWS. I think that, you know, you'll see that moving forward too.

[Dave Fildes, VP of Investor Relations at Amazon.com]

Thank you for your time joining us today and for your questions. A replay will be available on our investor relations website for at least three months. We appreciate your interest in Amazon, and we look forward to talking with you again next quarter.

[Operator]

Ladies and gentlemen, that does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Andy Jassy, CEO
• Dave Fildes, VP of Investor Relations
• Brian Olsavsky, CFO

Analysts

• Brent Thill, Managing Director at Jefferies
• Brian Nowak, Managing Director at Morgan Stanley
• Ross Sandler, Analyst at Barclays
• Justin Post, Managing Director at Bank of America
• Doug Anmuth, Managing Director at JPMorgan
• Eric Sheridan, Managing Director at Goldman Sachs