Amazon reported weaker-than-expected cloud revenue and operating income forecasts for the first quarter, raising concerns about the performance of its cloud unit, Amazon Web Services (AWS). AWS revenue rose 16.9% year-over-year to $29.27 billion, falling short of analyst projections of 17.4% growth and $30.9 billion in sales. This marks the slowest growth for AWS in five quarters and contrasts sharply with rival Microsoft, which recently beat expectations for its Azure cloud platform.
The underwhelming AWS performance weighed on investor sentiment, sending Amazon shares down by as much as 5% in after-hours trading. Analysts suggest that Microsoft’s strong results heightened expectations for Amazon, amplifying the market’s reaction to the miss.
Despite cloud concerns, Amazon delivered better-than-expected total revenue for the first quarter, reaching $155.7 billion against an expected $155.04 billion. The company also projected second-quarter net sales between $159 billion and $164 billion, above the average analyst estimate of $160.91 billion. This upbeat forecast helped reassure investors amid broader market uncertainties, including potential impacts from U.S. trade policies.
In a bright spot, Amazon’s advertising segment posted a 19% increase, reaching $13.92 billion and surpassing expectations, solidifying its position as a major force in the digital ad market behind only Meta and Alphabet.