(Noah Berger/Getty Images)

Amazon beats on Q2 earnings, but Q3 profit forecast comes in light; capex goes sky-high

Amazon posted quarterly results on Thursday afternoon.

7/31/25 3:06PM

Amazon blew past Wall Street’s expectations for second-quarter sales and profit, and the tech giant smashed the accelerator pedal on capex spending.

Still, shares were down 3.5% in recent after-hours trading, as its forecast for third-quarter operating profit came in light.

The company posted $167.7 billion in sales for Q2, growing 13% from the same quarter a year earlier and topping analysts’ expectations of $162.19 billion.

Earnings per share came in at $1.68, beating analysts’ expectations of $1.33, according to FactSet.

The company’s capital expenditures — a number that has been watched closely in recent quarters as tech giants spend bucketloads of money to build the infrastructure to power AI — totaled $32.18 billion, up a whopping 83% from a year earlier. That compared to analysts’ forecasts of $26.36 billion and first-quarter spending of $25 billion.

Amazon’s AWS cloud business saw revenue grow 17.5% year on year to $30.9 billion, powered by huge demand for AI. The Street was expecting $30.817 billion.

The company also gave third-quarter guidance, with its operating income forecast falling mostly below Wall Street’s consensus. It anticipates operating income of $15.5 billion to $20.5 billion, compared to estimates of $19.49 billion. Amazon said it expects sales of $174 billion to $179.5 billion, versus Wall Street’s consensus of $173.27 billion.

Some highlights for the quarter:

Advertising revenue was $15.694 billion, up 23% year on year. The company has joined others in the industry by offering generative-AI tools for advertisers to easily make ads from text prompts.
Subscription revenue (Amazon Prime, audiobooks, etc.) was up 12% year on year, delivering $12.208 billion for the quarter.
In June, Amazon announced it was expanding its same-day shipping to over 4,000 rural towns in a big push to reach more customers.
This year saw a longer four-day Prime Day event (which may have had slower sales than expected).
The new AI-enhanced Alexa+ “early access” program has been expanded to “millions of customers.”
The company introduced “Vulcan,” a new robot that can see, touch, and navigate human spaces.
“AI Zones” are being developed in Saudi Arabia (with HUMAIN) and Korea (with SK Group).

Amazon CEO Andy Jassy said AI was starting to seep into many parts of the company’s business, including the new AI-upgraded Alexa, shopping agents, and improvements to the company’s fleet of robots. In the earnings release, Jassy said:

“Our AI progress across the board continues to improve our customer experiences, speed of innovation, operational efficiency, and business growth, and I’m excited for what lies ahead.”

AI may also be affecting the company’s workforce of 1.5 million employees. Jassy told staff in June that productivity boosts from AI will “reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company.”

Nia Warfield, Luke Kawa

S&P 500 closes at record as tech heavyweights flex (besides Apple)

The Magnificent 7 did the heavy lifting, performing better than any S&P 500 sector ETF on Tuesday.

Matt Phillips

Oracle rips as backlog builds, but company misses on top and bottom lines

Oracle shares shot higher after-hours as the company reported a growing backlog, even though its fiscal Q1 results fell slightly short of expectations. The company reported:

Adjusted earnings per share of $1.47 vs. expectations of $1.48.
Revenue of $14.93 billion vs. expectations of $15.04 billion.

Shares were up 21% in after-hours trading, which is a pretty crazy stock move for a company with a market cap of more than $675 billion.

The market was likely impressed by a giant build in the company’s “remaining performance obligations,” or RPO, which is how the company measures the value of signed cloud computing deals that haven’t yet been reported as revenue. In a statement, CEO Safra Catz said:

“We signed four multi-billion-dollar contracts with three different customers in Q1. This resulted in RPO contract backlog increasing 359% to $455 billion. It was an astonishing quarter — and demand for Oracle Cloud Infrastructure continues to build. Over the next few months, we expect to sign-up several additional multi-billion-dollar customers and RPO is likely to exceed half-a-trillion dollars.”

Oracle Announces Fiscal Year 2026 First Quarter Financial Results

“We signed four multi-billion-dollar contracts with three different customers in Q1. This resulted in RPO contract backlog increasing 359% to $455 billion. It was an astonishing quarter — and demand for Oracle Cloud Infrastructure continues to build. Over the next few months, we expect to sign-up several additional multi-billion-dollar customers and RPO is likely to exceed half-a-trillion dollars.”

Matt Phillips

Robinhood rides index inclusion rally to record close

Robinhood Markets notched a new closing high Tuesday, as the crypto, stock, and options brokerage continued to ride a rally set off by the announcement that it would be added to the S&P 500 Index.

(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions.)

Robinhood appears to be benefiting from the so-called inclusion effect, a market phenomenon where companies that are added to major market indexes can see a price move as index funds — whose holdings must mirror the membership of the index — rush to buy the stock.

For what it’s worth, it seems like Robinhood will upon entry (effective prior to the market open on September 22) be the top-performing member of the index, as its roughly 220% gain this year is more or less double that of the current leader, Seagate Technology Holdings.

Luke Kawa

GameStop posts impressive Q2 results with big sales beat

Don’t call it a comeback!

GameStop is jumping aftermarket as the video games and collectibles retailer posted an impressive set of second-quarter results.

Net sales: $972 million (estimate $823 million).
Adjusted diluted earnings per share: $0.25 (estimate $0.16).

Note: these consensus estimates, compiled by Bloomberg, are from only two analysts.

The sales beat is particularly noteworthy, as the company had already done an exemplary job of expense control to help protect its bottom line. Revenues were up more than 20% versus the year-ago quarter, the biggest annual jump in sales since the company (and the world) was emerging from the pandemic in 2021.

The options market implies a move of plus or minus about 9.4% on earnings.

For a while, GameStop’s ability to generate positive net income was purely a function of the interest earnings on its substantial cash hoard. But now, GameStop has strung together five consecutive quarters of positive operating cash flows for the first time in its history!

This was the quarter when the company began to act on its bitcoin treasury strategy, raising money through the sale of convertible notes and using some proceeds to purchase the crypto asset.

Because of how much market value has been ascribed to potential for GameStop CEO Ryan Cohen to use its significant cash holdings to transform the company, the prospect of converting cash into bitcoin initially did not sit too well with investors following the announcement of this new strategic push in March.

Shares of the once-upon-a-time meme stock really didn’t get too much love during retail frenzies earlier in the summer, and were down about 25% year to date heading into this release.

As of the close of the quarter, its bitcoin holdings were valued at $528.6 million.

Western Digital Seagate Technology Rise to top of S&P 500

Data storage is so hot right now

A rapid turnaround in profitability helps explain how Seagate Technology and Western Digital have clawed to the top of the S&P 500 this year.

Matt Phillips4h