Is Amazon Stock a Buy Now? AMZN Analysis Following Q2 2025 Earnings

Is Amazon Stock a Buy Now? AMZN Analysis Following Q2 2025 Earnings

Amazon's Q2 2025 earnings beat expectations, boosting investor confidence in AMZN stock.

Amazon, the world's most powerful and diversified technology firm, has once again made headlines with its robust Q2 2025 quarterly earnings announcement. Investors have long followed AMZN closely, not just for its online retail juggernaut but also for dominating the cloud computing, digital ad, AI, and logistics industries. Today, with new quarterly numbers on the table and the global economy shifting into its transitionary phase, the question is again:

Is Amazon stock a buy right now?

Let’s unpack the data, trends, business performance, and overall investment potential of Amazon to help answer that question.

Q2 2025 Earnings Recap: Better Than Expected

Amazon’s latest financial results exceeded Wall Street expectations and reaffirmed the company’s steady momentum across its multiple business arms.

Revenue in the second quarter totaled $159.3 billion, up 11% from Q2 2024. Net income rose to $11.6 billion, nearly twofold from Q2 2024's $6.7 billion. The dramatic profitability boost was deeply rooted in operation efficiency, improved cloud services performance, and increased digital ad income.

One of the most notable highlights was earnings per share (EPS) reaching $1.19, significantly higher than analyst estimates of $0.96. This sort of outperformance has again excited bullish sentiment among institutional investors and retail investors alike.

Amazon Web Services: The Core Profit Driver

Amazon's cloud division, Amazon Web Services (AWS), is no longer a dominant segment but perhaps the very pillar of Amazon's profitability. AWS revenue grew 13% year-over-year to $26.4 billion in Q2 2025, making it the most profitable business unit at Amazon.

More convincing still is AWS's foray into AI and machine learning offerings, which are pulling in enterprise customers from sectors such as healthcare, finance, and software development. Amazon's suite of generative AI is being embedded into business systems globally, marking a new era of innovation.

AWS not only locks in high-margin recurring revenue but also places Amazon at the competitive AI race with Microsoft Azure and Google Cloud.

E-Commerce Is Still a Growth Engine

While cloud computing receives most of the attention, Amazon's core e-commerce business is exceedingly robust, particularly in North America. The firm saw a 9% year-over-year growth in North American sales, helped in part by advances in delivery speed, warehouse automation, and Prime membership participation.

Amazon's investment in same-day delivery and AI-driven logistics has more than paid off. Consumers in more than 130 metro areas throughout the U.S. can now get packages in hours. As an example close to home, I ordered some groceries and a Kindle case on a Monday morning and had the two on my front porch late in the afternoon—an experience that's hard to top, even by local retailers.

This unparalleled convenience continues to drive customer loyalty and increase order size.

Advertising Revenue: Stealthily Growing into a Giant

One of Amazon's fastest-growing revenue streams is its online advertising business, which raked in $13.7 billion in Q2 2025, a 14% increase over the prior year.

Few customers know just how much money Amazon makes from search and display ads on its site. This company, however, has become a high-margin behemoth while flying under the radar. Brands now spend large portions of their digital ad budgets on Amazon ads because that's where buying intent is greatest.

With more people starting product searches on Amazon instead of Google, the company is becoming a go-to platform for e-commerce marketing. This segment provides not just profitability, but also a defensible competitive edge.

Operational Efficiency and Strategic Cost Cutting

Amazon’s focus on leaner operations over the past year is paying off. The company has cut unnecessary costs, streamlined warehouse processes, and restructured international operations to better balance growth and efficiency.

It seems that Amazon has been able to cut per-package delivery expenses by more than 8% year-over-year, according to comments made on the Q2 earnings call. That's a huge accomplishment, particularly considering the inflationary trends in fuel and logistics worldwide.

Amazon CFO Brian Olsavsky pointed out that this cost savings is being plowed back into high-return spaces such as AI, automation, and customer experience enhancements. Long-term investors will love that.

Valuation: Is Amazon Still Undervalued?

Amazon's shares are sitting at about $160 a share, with a forward price-to-earnings (P/E) of about 40x. Although this valuation may look high, it is quite reasonable for a firm with so diversified and scalable top-line sources.

Relative to its peers within the tech and retail industry, Amazon still provides compelling value. Its enduring double-digit revenue expansion, expanding margins, and solid cash flow generation make it well-positioned for long-term capital appreciation.

Further, Amazon's long history of plowing earnings back into tomorrow's technologies and infrastructure—a policy that has rewarded long-suffering investors richly in the past—is another factor to consider.

What Wall Street Thinks

Many top investment banks and analysts continue to be firmly bullish on Amazon. A quick summary of recent analysts' opinions:

Goldman Sachs has a "Buy" rating and a target price of $200, attributing AWS and advertising strength.

Morgan Stanley has termed Amazon as "Overweight" and expects further upside from operational efficiency improvements.

Barclays has reaffirmed its "Strong Buy" rating, predicting AMZN to hit $190 over the next 12 months.

Investor sentiment is also evident in trading activity. Amazon is still among the most widely held stocks on Robinhood, Fidelity, and Schwab accounts, especially among Gen Z and millennial investors.

Risks and Considerations

Even the best companies have risks, and Amazon is not an exception.

Regulatory heat is building from the U.S. Federal Trade Commission (FTC) and European Union officials. Antitrust probes of its business practices, particularly with regard to third-party sellers and private label products, could lead to fines or business model constraints.

Amazon also faces increasing competition. Walmart, Shopify, and foreign competitors such as Alibaba and Temu continue to develop and capture market share, particularly in price-conscious segments.

There is also the wider economic environment to take into account. Inflation, interest rates, and geopolitical tensions are all able to impact consumer trends and cost of operations. These risks should be accounted for in the decision-making of investors.

Long-Term Prospects: A Pervasive and Changing Colossus

In the future, Amazon's path is full of thrilling advancements:

AI Expansion: Both in AWS and Alexa, Amazon is going deeper into generative AI, automation, and natural language processing technologies.

Healthcare push: Amazon's investments in online pharmacy services and wearable health monitoring may create new multi-billion-dollar opportunities.

Physical retail innovation: Ideas such as Amazon Go and Amazon Fresh reflect the company's eagerness to upend conventional retail.

This is not a company that complies. Amazon is continuously shifting, adjusting, and growing into fast-moving verticals, which is precisely what long-term investors need.

So, Is Amazon Stock a Buy Right Now?

For long-term, growth-oriented investors, Amazon stock remains a strong buy following its Q2 2025 performance. The company has proven resilient, innovative, and adaptable in an increasingly competitive and volatile market.

Its diversified revenue mix, strong leadership in cloud computing and AI, dominance in e-commerce, and rising profits from digital advertising all contribute to a compelling investment thesis. While no stock is without risk, Amazon’s track record of weathering economic cycles and emerging stronger makes it a valuable addition to a forward-looking portfolio.

If you’re concerned about volatility or market timing, consider dollar-cost averaging into AMZN or starting with fractional shares.

FAQs

1. How much was Amazon's Q2 2025 revenue?

Amazon announced $159.3 billion in Q2 2025 revenue, an 11% increase year-over-year.

2. Why is AWS significant to Amazon?

Amazon Web Services (AWS) is the highest-margin business of Amazon, delivering high-margin revenue and innovating in AI and cloud infrastructure.

3. Is Amazon a suitable investment for new investors?

Yes. Because of its solid foundations, diversified business model, and long-term growth prospects, Amazon is frequently suggested as a core holding for novices as well as seasoned investors.

4. Does Amazon distribute dividends to shareholders?

No. Amazon does not distribute dividends. The firm reinvests profits in growth prospects, research, and expansion initiatives.

5. What are the largest risks of investing in Amazon stock?

These include regulatory attention, international competition, and possible macroeconomic slowdowns affecting consumer expenditure and cost of operations.