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Amazon (Nasdaq: AMZN) recently announced its first quarter results that surpassed market expectations, but the on-again-off-again tariffs did not go well with its outlook. The stock fell 2% in the after-hours trading session.

Amazon’s Financials

Amazon’s first quarter revenues grew 9% to $155.7 billion, exceeding analyst estimates of $155 billion. Net income increased to $17.1 billion, or $1.59 per share, compared with $10.4 billion, or $0.98 per share a year ago. The market was looking for earnings of $1.36 per share.

By segment, Net Product sales grew 5% to $64 billion and Net Service sales grew 11% to $91.7 billion.

Revenues from Amazon Web Services (AWS) increased 17% to $29.3 billion, falling short of analyst estimates of $29.4 billion. Advertising services revenue of $13.9 billion were ahead of analyst estimates of $13.7 billion.

North America segment sales increased 8% to $92.9 billion and international segment sales increased 5% to $33.5 billion.

Amazon expects second quarter revenues of $159-$164 billion and an operating income of $13-$17.5 billion. The market was looking for revenues of $160.9 billion and an operating income of $17.64 billion.

The pressure on operating income was attributed to a range of factors including tariffs, trade policies, and recessionary fears. Amazon’s retail unit faces significant exposure to the current tariff issues. A significant portion of Amazon’s third-party marketplace, which accounts for more than half of its total sales, rely on China to make or assemble their products. While some sellers have raised prices, some are waiting on a final decision to come through before they make changes. Amazon itself is uncertain on where tariffs would settle, and how they would impact its financials.

Amazon’s AI Focus

Meanwhile, Amazon continues to invest in growing its AI offerings by investing in Bedrock capabilities and expanding AI use cases across its portfolio. It recently added Anthropic’s Cloud 3.7 SONNET hybrid reasoning model and Meta’s Llama 4 family of models to Bedrock. Earlier this year, it released Amazon NovaSonic, a new speech to speech foundation model that allows developers to build voice-based AI applications that are accurate, expressive, and more human like. Amazon claims that NovaSonic has lower word error rates and higher win rates over other comparable models.

Amazon believes that while most of the agentic AI use cases have been focused on getting AI models to answer questions, it wants its agentic AI offerings to be able to perform wide ranging, complex, multistep tasks. Alexa+ is expected to be one such action-oriented agent. Launched earlier this year, Alexa+ is Amazon’s next-generation assistant powered by generative AI. Alexa+ comes with features such as the ability to do simple actions like make reservations, call Uber, help them track, discover, and enjoy new artists. It can help users search, find or buy items online, and make useful suggestions based on their interests. The service is available to customers who own an Echo Show 8, 10, 15 or 21 for now, and only to those who signed up for early access release.

Amazon also recently released a research preview of Amazon Nova Act, a new AI model trained to perform actions within a web browser. The new service allows developers to break down complex workflows into reliable atomic commands so that they can add more detailed instructions to commands where needed. With Nova Act, Amazon hopes to increase accuracy on multistep agentic actions from 30 to 60% to 90+% in the future.

Yesterday, Amazon released a new AI shopping feature where users can now listen to short audio summaries of the product that they are looking to buy. The audio descriptions are being created by AI tools from on-page product summaries, reviews, and information from other websites. The short summaries are available for a limited number of items for now and are available only to US customers.

Amazon’s AI business operated on a multibillion-dollar annual revenue run rate. It does not provide more financial details, but it revealed that the segment continues to grow at “triple digit year over year percentages”. The investments and the offerings that Amazon is providing will surely help the segment grow at fast rates in the years to come.

Its stock is trading at $203.1 with a market capitalization of $2.16 trillion. It touched a 52-week high of $242.52 in February this year and has recovered from the 52-week low of $151.61 that it was trading at in August last year.

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