Amazon earnings primer: Why AI and tariffs are key to the second quarter

• Amazon is set to report second-quarter results after the bell.
• The earnings report will give investors a fresh look at how Amazon is navigating tariff-related uncertainty.
• During the quarter, Amazon began rolling out an AI-upgraded version of its Alexa voice assistant and it launched an AI group in a research and development lab.

Amazon will report second-quarter results after the market close Thursday.

Here's what analysts surveyed by LSEG are expecting:

• Earnings per share: $1.31
• Revenue: $161.94 billion

Wall Street is also looking at other key revenue metrics:

• Amazon Web Services: $30.8 billion, according to StreetAccount
• Advertising: $14.99 billion, according to StreetAccount

The company spooked investors in May when it warned in its earnings report that “tariff and trade policies,” as well as “recessionary fears,” could weigh on second-quarter results.

Amazon CEO Andy Jassy said at the time that “none of us knows exactly where tariffs will settle or when.” Jassy later said the company hasn't seen “any attenuation of demand at this point” due to tariffs and that Amazon has taken steps to keep prices steady on its site.

President Donald Trump's unpredictable tariff agenda primarily poses a threat to Amazon's sprawling e-commerce business, which accounts for the bulk of its sales. The core online stores unit is expected to post $58.98 billion in sales, according to StreetAccount. Wall Street is projecting seller services revenue to reach $38.7 billion during the quarter.

Several analysts said the tariff and geopolitical backdrop for Amazon has become more manageable in recent months, which is one of several reasons they're optimistic about the company's second-quarter report.

“Through the quarter, the US consumer backdrop has remained supportive as tariff concerns wane and consumers continue to spend,” analysts at Deutsche Bank wrote in a July 22 research note. The firm has a buy rating on Amazon's stock.

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Trump's tariffs may be giving Amazon a boost, to some extent.

The Deutsche analysts said it's “become abundantly clear” that Amazon has gained a greater share of the U.S. e-commerce market in the face of diminished competition from ultra-cheap Chinese online retailers Shein and Temu, which is owned by PDD Holdings.

Both companies have struggled to preserve their grip on American shoppers after the Trump administration ended de minimis, a trade exemption that allowed low-value shipments to enter the country duty-free, and instituted higher tariffs on Chinese imports.

Amazon's third-quarter guidance will give a view into whether the company expects tariff risks to continue. Analysts are projecting revenue to reach $173.3 billion in the current quarter.

Outside of retail, investors will be keeping a close eye on Amazon's cloud business. Revenue at AWS in the first quarter grew 17%, which fell short of analysts' estimates and was the slowest growth in a year. Analysts are projecting about the same year-over-year growth for the second period.

Jassy said in May that the cloud business would have grown faster if it weren't for capacity constraints caused by shortages of AI chips and other components.

Amazon has pledged to spend up to $100 billion this year, largely on AI-related investments for AWS. Wall Street will be paying attention to whether Amazon reaffirms or boosts that number. AI and cloud competitor Google last week upped its capital spend to $85 billion this year as part of its second-quarter earnings.

Like other major tech companies, Amazon has been laser-focused on AI. During the quarter, Amazon began releasing an AI-upgraded version of its Alexa voice assistant and it launched a new agentic AI group in its skunkworks research and development unit.

The technology is also transforming Amazon's workforce. In a June note to staff, Jassy said the company's corporate employee base will shrink in the coming years as it adopts more generative AI tools and agents.

“It's hard to know exactly where this nets out over time, but in the next few years, we expect that this will reduce our total corporate workforce,” Jassy wrote.

Amazon shares have lagged those of its tech peers this year despite its heavy investments in AI. Amazon's stock is up 5.4% year to date, while shares of Meta and Microsoft have climbed roughly 20% over the same stretch. Apple, which has struggled with its AI development, is down about 15.5% so far this year.