Amazon Earnings: 2 Reasons to Love It, 1 Reason to Be Cautious

Key Points

• Amazon beat expectations on revenue, earnings, and operating income in Q1
• Analysts remain overwhelmingly bullish, with price targets reaching up to $260
• Guidance was cautious, though, and shares are still struggling to recover recent losses

Amazon.com Inc. NASDAQ: AMZN reported a strong first quarter after Thursday’s close, with results that came in ahead of expectations across all headline metrics. Revenue rose nearly 9% year over year to $155.7 billion, beating by $580 million, while GAAP EPS of $1.59 beat by $0.23.

Yet despite the beats, the tech giant fell in early trading on Friday. With cautious guidance for Q2 and Amazon shares still down more than 20% from their February high, investors seem hesitant to chase the rally, at least for now.

So, what do we make of this setup? Here are two reasons to stay bullish on Amazon and one reason to be a little more careful in the near term.

Strong Beat on Q1 Numbers

Amazon delivered a clean beat in Q1, with strength across its core operations. Operating income exceeded expectations, margins held up well, and the AWS division remains one of the company’s most profitable units, growing at a healthy clip.

Importantly, management pointed to consistent consumer behavior despite a choppy macro backdrop. There were no signs of softening retail demand, and the company reaffirmed its focus on low pricing, broad selection, and fast delivery, three pillars that have long supported Amazon’s market share dominance.

Amazon managed to keep performance steady in a quarter that saw multiple headwinds, including global tariff uncertainty and shifting trade policies. It also flagged mitigation efforts like pulling forward inventory and improving geographic sourcing flexibility, which should help manage volatility moving forward.

Wall Street Is Staying Bullish

The analyst community remains firmly in Amazon’s corner. Firms across the board have reaffirmed Buy ratings in the past 24 hours, pointing to both near-term resilience and long-term optionality.

The teams at Wedbush, Evercore ISI, Deutsche Bank, JP Morgan, and Morgan Stanley all reiterated their bullish views, with price targets ranging from $210 to $260. Wedbush cited catalysts like automation in logistics, rising Prime prices, and monetization of Project Kuiper, while Evercore highlighted Amazon’s AI opportunities in cloud and retail.

Even as some firms modestly trimmed their targets to reflect near-term uncertainty, the general tone remained confident. The overarching message: Amazon is still positioned to gain share over time, and any short-term weakness should be seen as an opportunity to build a position.

JP Morgan’s valuation math supports this view. At 30x 2026 free cash flow estimates, Amazon’s stock looks more than reasonably priced for a company that continues to dominate multiple verticals and push deeper into AI, logistics, and cloud infrastructure.

But Guidance Was Cautious, and Momentum Still Feels Weak

For all the positives, Amazon’s Q2 guidance was cautious. Management noted several headwinds, including macro uncertainty, cost pressures from the Kuiper launch, and ongoing questions around global tariffs.

Morgan Stanley flagged the lack of clarity around the cost structure needed to deliver on long-term platform investments. Evercore acknowledged one-time hits to Q2 operating income, while Deutsche Bank pointed out that next twelve-month earnings visibility remains cloudy.

More important is how the stock is trading. Despite beating expectations and receiving a wave of analyst support, Amazon shares have yet to break meaningfully higher. They are still stuck in the lower end of their recent range, suggesting that investors wait for a stronger signal before stepping back in.

That hesitation makes sense. The stock has struggled to sustain any kind of rally in recent weeks, and Friday’s early action shows that some traders may be more inclined to fade strength until there’s a confirmed shift in trend.

Final Thoughts on Amazon Earnings 

Amazon’s Q1 report was undeniably strong, and analysts remain firmly in the bull camp. The company continues to deliver consistent results, and its AI, retail, and logistics investments are all moving in the right direction. Price targets ranging up to $260 show there’s still a lot of faith in the long-term story.

However, the cautious tone in the guidance and the stock’s inability to rally on the beat suggest that sentiment still needs time to heal fully. For long-term investors, this may be an ideal entry point. But for those looking for momentum, it might be worth waiting for a stronger move off the lows before getting involved.