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Home » Amazon Says Operating Profits May Decline Amid Economic Uncertainty

Amazon Says Operating Profits May Decline Amid Economic Uncertainty

May 1, 20253 Mins Read Business
Amazon Says Operating Profits May Decline Amid Economic Uncertainty
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As much as Amazon may have wanted to dodge the spotlight in President Trump’s trade war, there was no avoiding it for America’s largest online retailer.

First, the e-commerce company was entangled in the fleeting spat Tuesday with the White House over a faulty report that Amazon was going to show shoppers the costs of tariffs.

Two days later, the economic reality arrived when Amazon reported among the slowest growth ever in its North American retail business.

The region, Amazon’s largest, contributed to first-quarter financial results that showed the slowest overall sales growth since the depths of the pandemic, the company reported Thursday. Sales from January through March rose to $155.7 billion, 9 percent more than the same period a year earlier. Profit was $17.1 billion, up 64 percent.

For the current quarter, which ends in June, Amazon told investors to expect sales of $159 billion to $164 billion, and for operating profits to shrink to as low as $13 billion. Amazon added “tariff and trade policies” to the list of factors it says can make its forecasts uncertain.

The results were mixed compared with Wall Street’s expectations. Amazon’s stock price was down more than 3 percent in aftermarket trading following the earnings release.

“Obviously, none of us know exactly where tariffs will settle or when,” Andy Jassy, the chief executive of Amazon, said on a call with investors. He said the company is “pretty maniacally focused” on keeping prices down, by purchasing extra inventory in advance of tariffs and will be helping sellers on Amazon’s marketplace do the same.

Investors have been trying to untangle how President Trump’s on-again-off-again tariffs would affect Amazon customers. Some speculated that consumers may have accelerated purchases in March and April ahead of more tariffs kicking in, boosting spending in an otherwise uncertain environment.

Mr. Jassy said Amazon customers have done some “heightened buying” of certain types of products, although he did not specify which ones.

Many different components drive revenue in Amazon’s retail business. The online sales of products it offers directly to customers grew 5 percent to $57.4 billion, and the services it provides to sellers who list products on its site grew 6 percent to $36.5 billion.

Advertising, which investors view as a promising and profitable business, grew 18 percent to $13.9 billion.

Investors have long focused on Amazon’s cloud computing business, which generates most of the company’s profit. Mr. Jassy, who ran the cloud business before his promotion to chief executive, has been building up the company’s artificial intelligence offerings. The cloud business grew 17 percent, to $29.3 billion, in the first quarter.

Mr. Jassy said Amazon could have sold more cloud services if it had more capacity at its data centers, the remote buildings filled with computers that power the modern internet and A.I. He added that he expects the constraints to ease in the coming months. The company has been racing to build more infrastructure, and the release on Thursday showed Amazon spent more than $24 billion on capital expenses in the first three months of the year, about $2 billion less than the previous quarter.In February, Amazon said it was planning to spend about $100 billion on capital expenditures in 2025.

Amazon.com Inc Andrew R Cloud Computing Company Reports Computers and the Internet Customs (Tariff) Donald J E-Commerce International Trade and World Market Jassy Shopping and Retail Trump United States Politics and Government
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