Bloomberg Talks — Instant Reaction: Amazon Jumps After Sales, Profit Tops Estimates

Date: October 30, 2025
Host: Bloomberg
Guests: Poonam Goyal (Bloomberg Intelligence Senior Analyst, E-Commerce and Athleisure), Ed Ludlow (Co-host, BTech, Bloomberg TV), Eric Clark (Chief Investment Officer, Accuvest Global Advisors)

Episode Overview

This breaking news episode delivers instant analysis of Amazon’s Q3 2025 earnings, which significantly outpaced analyst expectations. Expert guests dissect Amazon’s stellar performance across key financial metrics, explore the drivers behind the company's growth (notably AWS, advertising, and automation), and discuss implications of recent layoffs and sector-wide trends in big tech. The conversation is dynamic, providing deep but accessible insight for investors and industry observers.

Key Discussion Points & Insights

1. Amazon’s Q3 Earnings: Massive Beat

• Headline Results

  • Net Sales: $180.17 billion (up 13% YoY), above estimated $177.82 billion
    • [01:51] Tim Stankwak: “I'm watching shares of Amazon in the after hours up 8 1/2% right now…”
  • Operating Income for Q4 Guidance: $21–$26 billion, estimate was $23.78 billion
  • Sales Guidance for Q4: $206B–213B vs. estimate of $208B
  • Stock soared, up 8.5–9% in after-hours trading.

• Performance Across Segments

  • AWS (Amazon Web Services):
    • 20% YoY growth — “the bright spot here”; crucial for overall profitability
    • [03:57] Poonam Goyal: “NWS was probably the bright spot here. 20% gains, we haven't seen that in a while.”
  • Online Advertising:
    • 22% revenue growth in constant currency; extremely high profit margins (75%-80%)
    • [08:39] Poonam Goyal: “It grew 22% in constant currency in the quarter... a high profit business… flowing right to the bottom line.”
  • Physical Stores & Retail:
    • Improved but North America margins still described as “weaker than expected,” attributed to Amazon’s strategy of keeping prices low to maintain market share and customer loyalty.

2. Margin Story: Profit Centers vs. Retail Strain

• Retail Margin Pressures

  • Lower North America margins due to price discipline and increased fulfillment investment (shipping, same-day delivery).
  • [04:44] Poonam Goyal: “They want to drive market share gains…Tariffs have clearly added to costs and many retailers…try to keep and hold prices steady or raise them selectively. So that could be part of the pressure.”

• Profit Offset by AWS and Ads

  • Cloud and advertising profits more than compensate for retail’s lower margins.
  • [08:05] Poonam Goyal: “Amazon's retail businesses finally break even the profitable. It took a long time…NWC is driving their margins. So us can compensate these investments to a certain extent and so can advertising because the margins here are just so much higher…”

3. Cloud & AI Investments: Trainium 2 and Anthropic

• Cloud Leadership

  • AWS remains Amazon’s biggest profit engine.
  • Yearly growth over 20% not seen since 2022.
  • [05:34] Ed Ludlow: “Cloud computing…accounts for the majority of operating income... this return to growth year-on-year of above 20% for the first time since 2022 is absolutely timely.”

• AI as a Growth Narrative

  • Amazon touts the multi-billion dollar “Trainium 2” custom AI chip business, competing with Google’s AI accelerators.
  • Investments in AI (Project Rainier data center, Anthropic partnership) positioning AWS favorably.
  • [06:40] Ed Ludlow: “What they're saying is that this is a multibillion dollar run rate business offering that in house chip to third party customers... at least on the one headline we have on that, it's paying dividends, so to speak.”

• Wall Street’s Favor Toward AI Transparency

  • Investors reward Big Tech companies for explicit AI/infrastructure growth disclosure.
  • [14:10] Ed Ludlow: “Investors seem to be rewarding any more little bits of information... that shows something coming out of the investment that's happened in prior quarters... Amazon has something to say here clearly.”

4. Advertising Boom and Changing Strategy

• Rapid Advertising Growth

  • Driven by Amazon Prime Video ad insertions and core product ad placements.
  • [09:18] Poonam Goyal: “It's a combination of both…The core of it is still product advertising.”

• Future Outlook

  • Ads expected to be a material revenue and profit driver as the segment scales.
  • Estimates for advertising business to reach $100B.

5. Profitability & Automation in Retail

• Retail Break-Even, Automation Next
  • Automation and robotics investments to further improve long-term profitability.
  • [08:05] Poonam Goyal: “Automation will be the next leg of growth to drive that further.”

6. Layoffs, Restructuring & AI’s Effect on Headcount

• Layoffs Contextualized

  • Q3 included almost $2B in severance costs from previous quarter’s layoffs.
  • Shifts in communication—from AI-driven workforce changes to “trimming middle management bloat.”
  • [11:20] Ed Ludlow: “At one time Andy Jassy said...eliminating roles was because of the advent of AI. But...when they cut 14,000 corporate roles…was it was more about bloat and middle management.”

• Industry-wide Trend

  • Big tech companies, including Amazon, are streamlining workforces due to AI efficiencies and robotics in warehousing.
  • [13:12] Eric Clark: “When you're implementing AI…Right-sizing of your headcount is a big part of the story...I think we're going to have to hear about that across most companies certainly deploying AI…”

7. Holiday Outlook & Retail Strategy

• Prime Day & Holiday Sales
  • Analysts want to know how early holiday promotions (October Prime Day) are performing, and if consumers remain resilient for Q4 holiday shopping.
  • [09:46] Poonam Goyal: “On the retail side, it's really about holiday and how that's going. Their October Prime Day deals that they had, how that's going and how the customer is responding…”

8. Big Tech and Sector-Evolution

• Amazon vs. Peers
  • All hyperscalers share major capex, but investor reaction depends on how convincingly each ties spend to AI and top-line growth.
  • [14:13] Ed Ludlow: “While they all have capex in common, the story they have to tell about literal top line growth as it relates to AI has been very different. And Amazon has something to say here clearly.”

Notable Quotes & Memorable Moments

• [03:57] Poonam Goyal: “They hit it out of the park. Sales were very good across the board, across all business segments, aws, online advertising, even physical stores.”
• [05:34] Ed Ludlow: “Cloud computing division accounts for the majority of operating income... this return to growth year on year of above 20% for the first time since 2022, it's absolutely timely.”
• [08:39] Poonam Goyal: “It grew 22% in constant currency in the quarter… a high profit business. It's about 75 to 80% profit margins by our estimates.”
• [06:40] Ed Ludlow: “What they're saying is that this is a multibillion dollar run rate business offering that in house chip to third party customers.”
• [11:20] Ed Ludlow: "Amazon has been inconsistent on this point... At one time Andy Jassy said right sizing... was because of the advent of AI. But... this past week…was more about bloat and middle management... So it's hard to know which... is the prevailing one here."
• [13:12] Eric Clark: “When you're implementing AI…Right-sizing of your headcount is a big part of the story."

Timeline of Key Segments

• [01:51]–[03:41]: Overview of Amazon’s numbers and initial stock reaction
• [03:42]–[04:44]: Poonam Goyal analysis—segment results, margin details
• [05:34]–[07:29]: Ed Ludlow dives deep into AWS growth, AI, and custom chip investments
• [08:05]–[09:36]: Retail automation, Amazon advertising business, profit drivers
• [09:46]–[10:23]: Analyst questions on Prime Day, holiday outlook
• [10:23]–[12:15]: Review of Amazon’s profitability efforts, cost management (severance, layoffs)
• [12:39]–[13:48]: Eric Clark on investor reaction, layoffs, and AI’s role in workforce changes
• [14:10]–[15:04]: Ed Ludlow connects Amazon’s strategy to broader sector trends among big tech/hyperscalers

Conclusion

Amazon’s Q3 2025 blew past expectations, driven by robust growth in AWS and advertising, with the cloud division’s profit offsetting tighter retail margins. Investments in AI (notably its Trainium 2 chip) are giving Amazon a compelling story for Wall Street, particularly as the company manages cost structure through layoffs and automation. Advertising is emerging as a high-margin juggernaut. The company prepares for a strong holiday season, and the episode closes by linking Amazon’s strengths—and challenges—into the wider big tech landscape.