Key Morningstar Metrics for Amazon
- : USD 280Fair Value Estimate
- : ★★★Morningstar Rating
- : WideMorningstar Economic Moat Rating
- : MediumMorningstar Uncertainty Rating
What We Thought of Amazon’s Earnings
Amazon AMZN reported first-quarter results that beat the high end of guidance on both the top and bottom lines. Revenue grew 15% year over year in constant currency to USD 181.5 billion, while operating margin was 13.1% versus 11.8% a year ago.
Why it matters: Overall results are positive, as consumer spending remains stable, the expansion of grocery and same-day delivery continues to drive demand, and artificial intelligence supports surging AWS growth. Further, profitability is impressive against various profitability headwinds.
- All segments were ahead of our model, with physical stores slightly light. Online stores, third-party seller services, and AWS were each more than USD 1 billion above expectations. We do not see any areas of concern with demand and believe the results support our positive long-term view on Amazon.
- Operating income was USD 23.9 billion with a margin of 13.1%, compared with the high end of guidance at USD 21.5 billion. Ramping up Leo costs, tariffs, massive data center expansion, and conflicts in Ukraine and the Middle East could have hampered results, but did not have a meaningful impact.
The bottom line: We raise our fair value estimate for wide-moat Amazon to USD 280 from USD 260 previously. Good results were matched by sound guidance, which led to our estimates being raised for both sales and operating income. Shares have bounced 25% in the last month, so we now see shares as fairly valued.
- AWS was strong, with growth accelerating to 28% year over year, and is now at a USD 150 billion annual run rate. The surging demand spans both traditional and artificial intelligence workloads and clearly supports management’s massive capital investment plans.
Coming up: The outlook for second-quarter revenue and profitability was better than expected. The midpoint of guidance calls for revenue of USD 196.5 billion and operating profit of USD 22 billion. Prime Day will fall in the second quarter of 2026, which we think boosts guidance.
