Net sales: down (tariffs, trade wars, AWS churn)
Operating income: down
Capital expenditures: increased (AI data center investments)
Free cash flow: "normal" (silent layoffs/RTO)
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Outlook is weak guidance and AWS misses, Azure strong. What else is new?
"Last year Prime Day was a no-brainer," said Sliter. "But if tariffs continue, discounting gets thrown out the window."
Prime Day generally pinches profitability for merchants, Sundaram said, because there is so much discounting compared to a regular day. The average Amazon seller reaps about 15% to 20% of a sale as a profit after cost of goods sold and Amazon's fees, according to consultants.
Amazon takes a 15% commission on each unit sold, not including the fees required to advertise and host discounts on Prime Day. Sellers pay Amazon $1,000 to have a discount highlighted as a “Best Deal” or $500 to have an item highlighted as a “Lightning Deal," for instance.
Adam Wilkens, who advises about 30 Amazon merchants, said that some of his clients "can't even think about Prime Day yet because they don't have their tariff pricing adjustments finalized."
U.S. shoppers spent $14.2 billion during Prime Day last year, 11% more from the previous year, according to research firm Adobe Analytics. Amazon has not announced the exact date for Prime Day, but said it would spread across four days in July.
Green said that he paid between $200 to $500 in Amazon fees and gave $3,000 to $5,000 in discounts during last year's Prime Day, but the sales event this summer is too risky.
Tariffs Threaten Amazon’s Retail Margins
One of the biggest hurdles for Amazon right now is the latest string of U.S. tariffs. Roughly 18% of the products sold on Amazon’s platform are sourced from China. Even more, nearly 60% of Amazon’s third-party sellers rely on Chinese imports. These tariffs could tighten seller margins, and when that happens, sellers tend to pull back on advertising—which is one of Amazon’s most profitable segments. That leaves Amazon’s retail division under pressure. It faces slimmer profits on both product sales and ad revenue.
AWS and AI Power Amazon’s Growth Story
But it’s not all headwinds. Amazon Web Services (AWS), the company’s cash cow, continues to be the engine behind profitability. Analysts expect modest AWS growth, though the real story is how AI spending will shape margins. CEO Andy Jassy has made it clear: Amazon is “building for the long term” with AI and isn’t afraid to spend big today for gains tomorrow.
What Is the AMZN Target Price? $160/share.
And Donald's weakened USD$ will impact earnings too.