Amazon cloud revenue, income forecast disappoint, sees quarterly sales above estimates

Amazon.com on Thursday reported lower than expected first-quarter cloud revenue growth and forecast operating income below estimates, disappointing investors. Shares of the company fell as much as 5% in after-hours trading. Amazon Web Services, the company’s cloud unit, is showing signs of weakness. Its 16.9% increase in quarterly revenue, to $29.27 billion, missed expectations of 17.4% growth and $30.9 billion in sales.

Rival Microsoft, by comparison, reported on Wednesday it had exceeded estimates for its Azure cloud unit. AWS revenue grew at its slowest pace in five quarters. “It’s always felt like AWS and Google Cloud were taking the most share for quite some time, but maybe that’s starting to turn because Microsoft posted great numbers,” said Dave Wagner, portfolio manager at Aptus Capital Advisors. He said expectations for Amazon were higher after Microsoft’s strong performance.

The Seattle company said operating income for the current quarter would be between $13 billion and $17.5 billion, compared with the average estimate of $17.7 billion, according to LSEG data. Amazon’s forecast for second-quarter sales was above estimates, however, a reassuring sign to investors that the e-commerce company would navigate uncertainty related to U.S. tariffs.

Amazon reported total revenue of $155.7 billion for the first quarter ended March 31, compared with analysts’ estimate of $155.04 billion, according to data compiled by LSEG. The company expects net sales between $159 billion and $164 billion for the second quarter, compared with analysts’ average estimate of $160.91 billion, according to data compiled by LSEG.

High tariffs imposed by U.S. President Donald Trump on goods imported from China have cast uncertainty on retailers such as Amazon. Some sellers, for instance, have said they plan to sit out the company’s heavily promoted Prime Day sales event in July, Reuters reported. Amazon posted a 19% jump in online ad sales to $13.92 billion, surpassing analyst estimates. The company has become a major player in ad sales, trailing only Meta and Alphabet.