Here’s the No. 1 Thing AMZN Stock Fans Should Watch When Amazon Reports Q3 Earnings

Amazon (AMZN) is poised to report Q3 2025 results, following a year where its stock significantly lagged the broader market and tech peers, rising only 3.9% compared to the S&P 500's 16.5% gain. This underperformance is primarily due to slower-than-expected growth in Amazon Web Services (AWS), which expanded 17% in H1 2025, facing intense competition from Microsoft Azure and Google Cloud despite robust demand for AI workloads. Management projects Q3 revenue between $174 billion and $179.5 billion, with e-commerce benefiting from logistics efficiencies; however, investor attention will remain squarely on AWS's ability to accelerate growth in cloud and generative AI, navigating both competition and capacity constraints.

Analysis

Amazon (AMZN) is set to report Q3 2025 results amidst significant stock underperformance, with shares up only 3.9% YTD compared to the S&P 500's 16.5% advance and peers like Microsoft (MSFT) and Alphabet (GOOGL) surging 25.8% and 40.3% respectively. This divergence is largely attributed to investor concerns over the growth trajectory of Amazon Web Services (AWS).

AWS, despite growing 17% in H1 2025 and posting $30.9 billion in Q2 revenue (17.5% YoY), has not met investor expectations for AI-driven acceleration. The segment faces intensifying competition from Microsoft Azure and Google Cloud, alongside potential capacity constraints, which are critical factors for its future expansion.

Management projects Q3 revenue between $174 billion and $179.5 billion, implying over 11% year-over-year growth at the midpoint, driven by sustained momentum in core businesses. The e-commerce segment is expected to benefit from logistics efficiencies, strong Prime engagement, and competitive pricing, contributing to healthy retail sales and margin growth.

Despite e-commerce strength, investor attention remains primarily on AWS performance, particularly its ability to capitalize on strong demand for traditional cloud and generative AI workloads. The Q3 report will be crucial in determining if Amazon can address growth concerns and narrow the performance gap with its tech counterparts.

Key Decisions for Investors

• Investors should closely monitor AWS's Q3 growth rate and management commentary on generative AI adoption and capacity, as this is the primary driver of investor sentiment and future valuation.
• Assess Amazon's strategy to counter intensifying competition from Microsoft Azure and Google Cloud, particularly in high-growth AI segments, which could impact long-term market share.
• Consider AMZN's valuation relative to its tech peers, given its significant underperformance, to determine if current pricing reflects a discounted growth outlook for AWS or presents a potential buying opportunity if AWS re-accelerates.