Was Amazon Earnings Really That Bad? The Street Doesnt Think So

Amazon's stock price (AMZN) has taken a sharp pullback today, down more than 6% on what was largely a positive Q2 2025 earnings. Markets appear to be reacting to concerns about AWS competitiveness, with both Microsoft and Alphabet having put up stronger growth numbers Y/Y in their respective cloud businesses.

While the market's initial response has been negative, several analysts have raised their price targets on the stock, seeing the pullback as presenting a potentially compelling entry point for the long-term.

Amazon's Q2 results revealed a 13% year-over-year revenue increase to $167.7 billion and a 35% jump in net income to $18.2 billion, translating to earnings per share of $1.68, significantly exceeding analyst expectations of $1.33.

Amazon Web Services (AWS) revenue also grew by 17.5%, reaching $30.9 billion. However, the company's Q3 operating income forecast of $15.5 billion to $20.5 billion fell short of Wall Street's expectations.

The View From Wall Street

Despite the market's initial reaction, analyst sentiment remains largely bullish. UBS reiterated its “Buy” rating, asserting that Amazon is “coiled” and poised to outperform, whilst Roth Capital maintained a “Buy” rating with a $250 price target, citing accelerating AWS growth, double-digit e-commerce growth, and over 20% growth in advertising as encouraging signs.

Cantor Fitzgerald raised its price target on Amazon to $280 from $260, keeping an “Overweight” rating, pointing to Q2 revenue and EBIT exceeding Street estimates by 3% and 13%, respectively. Similarly, BofA increased its price target to $272 from $265 (Buy), Barclays (to $275), Citi (to $270), JPMorgan (to $265), and DA Davidson (to $265).

However, some analysts expressed caution.

Oppenheimer lowered its price target to $245 from $250, keeping an “Outperform” rating, citing investor frustration with the lack of positive second-half 2025 AWS commentary, as capacity issues are expected to persist until at least year-end.

Stifel also lowered its price target to $260 from $262, maintaining a “Buy” rating, observing that stable revenue growth at AWS was a disappointment compared to Microsoft's Azure and Google's GCP.

AI Investment and AWS Outlook

Amazon is making significant investments in AI infrastructure, with projected spending exceeding $100 billion this year with CEO Andy Jassy repeatedly emphasizing the transformative potential of AI, characterizing it as “the biggest technology transformation for a lifetime”.

The debate around Amazon Web Services (AWS) also remains one of the key points of contention.

While AWS revenue continues to grow, some analysts have pointed out that its growth is lagging behind competitors like Azure and Google Cloud, and by some way. This has fueled concerns about potential market share losses, even if Amazon believes that as it alleviates infrastructure capacity constraints, demand will remain strong.

All in, the earnings report was a slightly mixed picture, with strong financial performance overshadowed by concerns about future profitability and the AWS unit. We have a market today that is reacting to much of these concerns in price action, but at the same time with analysts looking towards the future and earmarking this level as an opportunity. Time will tell which is right.