Instant Reaction: Amazon Jumps After Sales, Profit Tops Estimates

Summary

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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)

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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.

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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.”

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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."

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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

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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.

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Transcript

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[Bloomberg Host]

Bloomberg Audio Studios Podcasts Radio News.

[Ed Ludlow]

This.

[Tim Stankwak]

Is a breaking news update from Bloomberg. Instant reaction and analysis from our 3,000 journalists and analysts around the world. It is. It's Bloomberg businessweek Daily. That's Carol Massar. I'm Tim Stanwak. I'm watching shares of Amazon in the after hours up 8 1/2% right now. The company reported net sales for the third quarter that beat the average analyst estimates. We're talking about $180.17 billion. That's up 13% year over year. The estimate was for $177.82 billion. Coming in net sales excluding FX up 20% versus 19% year over year estimates for 17.9% as far as that forecast looks seasoned at sales of 206 billion to 213 billion. The estimates for $208 billion. So kind of on the high like.

[Bloomberg Host]

Yeah, some room for outperformance yeah.

[Tim Stankwak]

Operating income for the fourth quarter, the company sees that at $21 billion to $26 billion. The estimate for 23.78 billion.

[Bloomberg Host]

We're going to get some analysis of on Amazon, but just want to mention Netflix soaring all of a sudden, up 3.2% here in the aftermarket. This as the a10 for one stock split. Keep in mind this stock, one share costs $1,089. So we're talking about. Now it's going to be much more accessible to investors, right. Is going out.

[Tim Stankwak]

I don't, I don't think so.

[Bloomberg Host]

At $100.

[Tim Stankwak]

No. You can buy shares. You can buy pieces of stock.

[Bloomberg Host]

You don't believe that?

[Tim Stankwak]

I don't fracture. I think back in the day. Yeah, back in the day it made a big difference. But now that all these retail brokerages offer.

[Bloomberg Host]

You want take this outside?

[Tim Stankwak]

No, I mean everyone. Whenever I say this, people get in touch with me online and they talk about options and like how important it is for that. But yeah, it's always weird when you see something that's not fundamental actually moving the stock price.

[Bloomberg Host]

All right, good stuff. All right. Anyway. But it is, but it is moving it. Hey, let's get to back to Amazon because that stock is soaring in the aftermarket.

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[Bloomberg Host]

Goyal is Bloomberg Intelligence senior analyst for E Commerce and Athleisure. She joins us from the Bloomberg Intelligence Princeton Bureau. Let's go to you. God put this looks like a really strong report on a lot of, on a lot of metrics.

[Poonam Goyal]

It definitely is. I mean, they hit it out of the park. Sales were very good across the board, across all business segments, aws, online advertising, even physical stores. So from a top line perspective, very, very encouraging results. In fact, NWS was probably the bright spot here. 20% gains, we haven't seen that in a while. On the margin side, I think AWS did really well. But then when it came to North America margins, they were weaker than we expected. So it's the only one area that I saw some skepticism and I think that's largely due to their ability to want to maintain low prices to make sure the consumer keeps coming back and investing in its fulfillment.

[Tim Stankwak]

So you think that margins took a hit because Amazon is keeping prices low?

[Eric Clark]

Why?

[Poonam Goyal]

I mean, they, they want to drive market share gains. Right. So if you think about what's happening in retail this year, tariffs have clearly added to costs and many retailers have decided to offset those costs through efficienc to try to keep and hold prices steady or raise them selectively. So that could be part of the pressure. And then also, you know, Amazon has stepped up its game on shipping where it was the leader and it still is the leader, but they're continuing to invest there to get items to you faster, same day, et cetera.

[Bloomberg Host]

Yeah, they still do it, right? They're definitely completing on that one. Hey Ludlow, come on into our conversation. Co host of Bloomberg of BTECH on Bloomberg Television watching these numbers. I mean investors are sending shares of Amazon much higher here in the aftermarket stock up about 9%.

[Ed Ludlow]

The cloud computing division accounts for the majority of operating income. Right. And this return to growth year on year of above 20% for the first time since 2022, it's absolutely timely. You know, I think Google gave us a lot of evidence that gcp, their cloud offering has a lot of momentum at the moment. But this is a bit of a barnstormer from Amazon to say actually on every metric that we track us is doing really well. One of the headlines that you spotted, really excellent, the appreciation in their investment on Anthropic that had a non operating income impact to the bottom line. Right. But also they're talking a pretty fierce game about their custom training, chip training too and calling it a multibillion dollar business. And what we've seen in the past is when Amazon hasn't necessarily put a specific dollar figure on something but said this AI thing is in the billions of dollars, the market has given them a lot of credit for giving us at least a little bit more detail.

[Tim Stankwak]

Ed, where does the Trainium 2 model fit in?

[Ed Ludlow]

Well, this is why I bring Google up. You know, when we broke the story that Anthropic had done a deal with Google for use of 1 million TPU's Google's custom AI card or accelerator, it was a bit of a black eye for Amazon because Amazon is also a major investor in Anthropic. And Amazon Anthropic have this large project called Project Rainier, a data center in Indiana. What they're saying is that this is a multibillion dollar run rate business offering that in house chip to third party customers. We don't know any more than that, but it does indicate that both Franthropic and for other customers outside of Anthropic that it's a viable business. You know, they've invested a lot of money on custom silicon and at least on the one headline we have on that, it's paying dividends, so to speak.

[Bloomberg Host]

Hey, speaking of dividends and paying dividends and put them, I want to go back to you on the retail side of this. I mean, we know that Andy Jassy, the CEO of Amazon, has really been working on improving profitability of that business, automated automation. We've had their key head of robotics, Brady, talking about what Amazon can continues to do at that company in terms of automation and robotics. So what else can you give us in terms of color on the retail side of the business, which is something that so many of us. Right. Identify very clearly with when it comes to Amazon?

[Poonam Goyal]

Yeah, I think, look, they're making all the right investments to improve profitability in the longer term. Amazon's retail businesses finally break even the profitable. It took a long time to get here and I think automation will be the next leg of growth to drive that further. But as I mentioned, you know, earlier, 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 than they'll ever be able to get in the retail business.

[Tim Stankwak]

How is, how is the advertising business doing? Poonam?

[Poonam Goyal]

It's doing really well. It grew 22% in constant currency in the quarter. So right where we expected. And I think, you know, that's a high profit business. It's about 75 to 80% profit margins by our estimates. And that's flowing right to the bottom line. We see it going to $100 billion. So there's a lot of improvement that they can build in advertising and really drive that business higher from here.

[Tim Stankwak]

Where is that coming from? Is that coming from interstitials placed in Amazon Prime Video, which I think, you know, caught a lot of people off guard when they started doing that. Was it last year maybe or. Yeah, yeah. Or is it, or is it coming from like products that are paid for placement?

[Poonam Goyal]

I think it's a combination of both. You're absolutely right. These ads are driving incremental revenue. But if you think about the base of this revenue base, it's still coming from product advertisements. The ads do help and they will become a larger driver as the ad business grows in size. But the core of it is still product advertising.

[Bloomberg Host]

Hey Putin, before we let you go, what's kind of top of mind for you in the areas that you cover with Amazon that you would be asking on the earnings call?

[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. We think the customer is still holding up well. Are they seeing the same thing and how do they see holiday shaping out to be where we're entering holiday?

[Bloomberg Host]

All right, love it, Love it. Looking out for Putin's research too, that will hit the Bloomberg. Poonam Goyal is Bloomberg Intelligence senior analyst for E Commerce and Athleisure. We want to go back to the co host of BTech on Bloomberg TV every day, 11am to noon on Bloomberg Television. Television. Ed Ludlow still with us. Ed, as you continue to pore over that release, what else is catching your attention?

[Ed Ludlow]

Yeah, I mean Putin gave us the story with Amazon.com right. Most of the audience are going to be more familiar with the e commerce business than they are with the cloud computing business. They are number one in cloud computing and as Punam put it so succinctly, the profit is compensated for the less profitable E commerce side through, through cloud. But Andy Jassy is really focused on retail being more profitable. Tim is absolutely right that you look at advertising and the role that that's played there and it has been improved. I would also just note that in the quarter Amazon numbers reflect almost $2 billion in severance costs. That's the other story of Amazon and getting rid of the bloat.

[Tim Stankwak]

That's, that's the, that was the previous quarter, right. Not the current quarter.

[Ed Ludlow]

Previous quarter, exactly.

[Tim Stankwak]

So the, is the current quarter going to take a hit right now or is it going to be the, the upcoming quarter? It's always tough with, with this stuff because we don't know how these employment agreements work.

[Ed Ludlow]

Yeah. But the third quarter operating income was $21.7 billion, almost $22 billion without charges, when you strip the charges out. And so, you know, this is a profitable business overall because of cloud. It's a funny thing to say, but what's a couple of billion, you know, to right size the company? And that is the thing here. Amazon has been inconsistent on this point. At one time Andy Jassy said that. Right. Sizing the company and eliminating roles was because of the advent of AI. But the communication this past week when they cut 14,000 corporate roles was it was more about bloat and middle management. Right. Sizing areas and simplifying the management structure more than anything. So it's hard to know which of those two stories is the predominant or prevailing one here. But yeah, it's for Amazon like it's a, it's a one time charge that. So what.

[Bloomberg Host]

All right, we want to bring into the conversation to Eric Clark, chief investment officer at acuvass Global Advisors and portfolio manager for the Alpha Brands Logo etf, which has Amazon and Apple and Alphabet and Microsoft and Netflix in its holdings. Ed Ludlow is going to stay with us. He's of course co host of BTech on BTV. Eric, come on in. On Amazon. You like this?

[Eric Clark]

I love it. I mean, I think the market loves it too. How are you guys? I think the setup into the quarter was pretty attractive because people were nervous about us and losing market share. So the stock sold off into the print. And then you get some reality that Amazon is still doing Amazon.

[Tim Stankwak]

Well, how do you read into this report in the context of the layoffs that we learned about earlier this week? Did, did Amazon need to do those layoffs? Do, do you see it as a directional shift for the company? Obviously they were doing pretty well with the same headcount.

[Eric Clark]

I mean you're going to hear more and more of this and I don't love that as a consumer investor. But the reality is when you're implementing AI through your business and you're obviously serving other companies doing the same thing. Right. Sizing of your headcount is a big part of the story. And so with robots in warehouses, plus all the typical rights. Right, Sizing. I mean it's a very large company, a very large employer. So I think we're, we're going to have to hear about that across most companies certainly deploying AI because they're, they're getting a lot of efficiencies and might not need the same kind of people.

[Bloomberg Host]

Hey Ed, I know you're doing double duty for us and for our TV team, but you know, I'm just thinking about all these names, these hyperscalers, these big tech that have been reporting as Anuragrana said, they're not apples to apples. Even though we sometimes we're getting Apple in seven minutes we pull them together and it's going to be back to, to talk Apple with us. But how are you thinking against kind of the big cap tech news?

[Ed Ludlow]

Smart question.

[Bloomberg Host]

Yeah. How this fits?

[Ed Ludlow]

Well, so what they all have in common is capital expenditures. So okay, on the one hand they will have capital expenditures. It's what they then are able to say. On the other that they've been inconsistent. Matter didn't say anything about growth related to AI and the stock fell precipitously. I go back to the trainium to headline from us, it being a multibillion dollar business, that commitment to invest in infrastructure, but also giving us a number for what's come online. The kind of fighting talk from Andy Jassy on the growth and its ties to AI specifically, investors seem to be rewarding any more little bits of information that you can get that shows something coming out of the investment that's happened in prior quarters. And so 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.

[Bloomberg Host]

All right, Ed, we know you're going to probably head over to the TV side, but you're going to come back with us a little bit later on when Apple reports in just a few minutes. Our Ed Ludlow, of course, co host of BTech on BTV.

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