Cloud computing and online retail behemoth Amazon (NASDAQ: AMZN) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 13.4% year on year to $180.2 billion. The company expects next quarter’s revenue to be around $209.5 billion, close to analysts’ estimates. Its GAAP profit of $1.95 per share was 25.2% above analysts’ consensus estimates.
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Amazon (AMZN) Q3 CY2025 Highlights:
- Revenue: $180.2 billion vs analyst estimates of $178 billion (1.2% beat)
- Operating Profit (GAAP): $17.42 billion vs analyst estimates of $19.94 billion (12.6% miss due to $2.5 billion related to a legal settlement with the Federal Trade Commission and $1.8 billion in estimated severance costs primarily related to planned role eliminations; would have beat excluding)
- EPS (GAAP): $1.95 vs analyst estimates of $1.56 (25.2% beat)
- North America Revenue: $106.3 billion vs analyst estimates of $105 billion (1.2% beat)
- AWS Revenue: $33.01 billion vs analyst estimates of $32.41 billion (1.9% beat)
- North America Operating Profit: $4.79 billion vs analyst estimates of $7.37 billion (35% miss due to $2.5 billion related to a legal settlement with the Federal Trade Commission and most of the $1.8 billion in estimated severance costs primarily related to planned role eliminations)
- AWS Operating Profit: $11.43 billion vs analyst estimates of $11.1 billion (3% beat)
- Operating Margin: 9.7%, down from 11% in the same quarter last year
- Free Cash Flow Margin: 0.2%, down from 3% in the same quarter last year
- Market Capitalization: $2.46 trillion
“We continue to see strong momentum and growth across Amazon as AI drives meaningful improvements in every corner of our business,” said Andy Jassy, President and CEO, Amazon.
Revenue Growth
Amazon proves that huge, scaled companies can still grow quickly. The company’s revenue base of $347.9 billion five years ago has nearly doubled to $691.3 billion in the last year, translating into an exceptional 14.7% annualized growth rate.
Over the same period, Amazon’s big tech peers Alphabet, Microsoft, and Apple put up annualized growth rates of 17.6%, 14.8%, and 8.4%, respectively. Comparing the four is relevant because investors often pit them against each other to derive their valuations. When adjusting for these benchmarks, we think Amazon’s price is fair. 
We at StockStory emphasize long-term growth, but for big tech companies, a half-decade historical view may miss emerging trends in AI. Amazon’s annualized revenue growth of 11.7% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, Amazon reported year-on-year revenue growth of 13.4%, and its $180.2 billion of revenue exceeded Wall Street’s estimates by 1.2%. Company management is currently guiding for a 11.6% year-on-year increase in sales next quarter. Looking further ahead, sell-side This projection is healthy for a company of its scale and illustrates the market sees some success for its newer products.
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Profitability: The Key Debate
Many investors understand that Amazon’s e-commerce business caps its gross margin, which averaged 46.3% over the last five years. The company lags behind its pure-play tech peers because it sells many commoditized goods online where it must acquire and hold physical inventory.
What the market debates, however, is where Amazon’s long-term operating profitability could ultimately settle. Sure, its five-year margin of 7.2% was weak, but it rose by 4.8 percentage points thanks to leverage on the fixed costs in its consumer-facing businesses and the highly profitable AWS segment becoming a larger portion of its revenue. Our question is if Amazon’s momentum can continue and result in a mid-to-high teen percentage margin somewhere down the line.
The company’s North America segment holds the keys to this answer. Throughout the years, Amazon has made huge investments to not only attract hoards of customers into its ecosystem but also retain them. Some areas of focus in this effort included its unmatched delivery network and video streaming content.
Bulls will argue that Amazon can afford to ease up and begin riding its investments of the last two-plus decades. Wall Street seems to agree somewhat and is projecting its trailing 12-month operating margin of 11% to reach 12.2% in the coming year. Combined with its performance over the last few years, this suggests Amazon’s long-term profitability could go much higher, potentially leading to earnings and a stock price that follows.
Key Takeaways from Amazon’s Q3 Results
We also happy that Amazon's revenue narrowly outperformed Wall Street’s estimates, as Amazon Web Services and North America all beat. Investors are especially cheering the fact that AWS revenue accelerated growth accelerated to 20, a level not seen since 2022 when that business unit was much smaller. Operating profit missed, but excluding two one-time charges, it would have beaten, and the market is understanding this. Overall, this print featured some key positives. The stock traded up 9.6% to $244.30 immediately after reporting.
Indeed, Amazon had a rock-solid quarterly earnings result, but is this stock a good investment here? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
