Amazon's Advertising Soars as Cloud Growth Slows in Q2 2025

Amazon's financial results for the second quarter of 2025 presented a mixed picture. While the company's overall revenue grew 13% year-over-year to $167.7 billion, beating analyst estimates, its operating income guidance for the current quarter disappointed investors.

The surprise package during the quarter was Amazon's advertising business, which saw a 23% surge in revenue, outpacing expectations. This strong performance in advertising contrasted with the slower growth of Amazon's cloud service, AWS, which reported an 18% increase in revenue - well below the 39% and 32% growth reported by Microsoft Azure and Google Cloud, respectively.

Amazon's CEO, Andy Jassy, tried to reassure investors by highlighting the company's "pretty significant" leadership position in the cloud market compared to its rivals. However, the guidance for the current quarter's operating income, which is expected to be between $15.5 billion and $20.5 billion, with the lower end falling short of analyst estimates, left investors wanting more.

The company's decision to invest over $100 billion in AI this year, building data centers and software, is seen as a contributing factor to the weaker operating income guidance. Jassy expressed optimism about Amazon's AI offerings, stating that the company's "AI progress across the board continues to improve our customer experiences, speed of innovation, operational efficiency, and business growth."