Amazon’s latest results beat expectations across the board, driven by strong growth in Amazon Web Services and continued cost-cutting measures. The company reported a 13 per cent increase in revenue to US$180 billion, while earnings per share came in well above estimates.
BNN Bloomberg spoke with Brent Thill, tech analyst at Jefferies, who said AWS remains central to Amazon’s valuation but that questions linger about its AI strategy, efficiency, and market share as competitors like Microsoft and Google extend their lead.
Key Takeaways
- Amazon’s quarterly revenue rose 13 per cent to US$180 billion, with earnings per share of US$1.95, beating estimates.
- AWS revenue grew 20 per cent to US$33 billion, with improved margins in the mid-30s.
- Analysts say backlog growth will be the key indicator of AWS’s momentum.
- Job cuts of 14,000 mark an early step in Amazon’s push for leaner operations and AI integration.
- Amazon’s stock remains undervalued compared with peers, but questions persist over its AI competitiveness.
Read the full transcript below:
MERELLA: We want to get back to Amazon’s earnings, which have just been coming into the newsroom. Let me give you a quick recap before we join our guest. Net sales came in at US$180.17 billion, up 13 per cent year over year. The estimate had been US$177.82 billion, so a beat there. Earnings per share were US$1.95 versus US$1.68 last quarter. The estimate had been US$1.58, so a very big beat for Amazon.
Let’s go to Brent Thill, tech analyst at Jefferies. He joins us now to talk more about this. Brent, thanks for joining us. I know there had been concerns about Amazon Web Services, with investors worried competitors were eating into its business. I was just looking at the numbers — AWS came in with US$33 billion for the quarter, an increase of 20 per cent. Do you think this will put investor concerns to rest?
BRENT: Yeah, I think it’s a mini extinguish of some of the concerns. Some of the worries around where they stand in AI will still linger, but we think Amazon stock has really underperformed all its tech peers. That’s largely because AWS has been somewhat left behind in terms of growth rates.
You look at Microsoft — 40 per cent growth. You look at Google — its backlog growth was incredible. Microsoft’s commercial backlog grew 50 per cent last quarter. The revenue number is important, but the most important thing we’ll get, usually given on the call or in their filing, is backlog growth. That’s the real indicator.
Last quarter, they said AWS backlog growth was 25 per cent while revenue grew in the high teens. You knew it had to accelerate — when your backlog rises, you’re signing more contracts than you’re taking in revenue. So we kind of knew this quarter would be higher. Twenty per cent is great, but we have to see really good backlog numbers to support the stock.
The majority of Amazon’s market cap comes from AWS — not retail, not video, not other businesses. Those aren’t great in terms of margin. AWS is the crown jewel — it’s growing fast and has margins in the 30s. The margin went up sequentially, back into the mid-30s, which is encouraging. Guidance for operating income in Q4 was a little better, so I think some of these cost cuts and tightening efforts are starting to pay off.
It’s underperformed and is cheap — cheap compared with peers and with its historic average. We like the stock, but I don’t think they’re completely out of the woods yet when it comes to the AI race. They’ll need to come out with a much stronger message this call because the last one was disappointing.
MERELLA: Why do you think it’s been slow to realize its web services potential?
BRENT: Amazon was the first out of the gate in cloud. In our model, it owns close to 50 per cent of the cloud market — lower if you include all players. But that share has been coming down. They’re losing share to Microsoft, Google and Oracle — the big gainers. So they need to slow that share loss.
They also need stronger AI pull-through. Last night, Microsoft said it got a US$250-billion contract from OpenAI and a US$300-billion deal from OpenAI. So where are Amazon’s big contracts? Why aren’t they landing those? Amazon is aligned with Anthropic, but Anthropic has given a lot of its workloads to Google. Everyone’s scratching their heads — why not AWS? There are still a lot of ongoing concerns around the AI initiative there.
MERELLA: Let me ask about the company laying off 14,000 people. They say they’re leaning on AI to be more effective and to be leaner and more agile. But there will be costs for compensation down the line. Any concerns about that?
BRENT: Honestly, they need to lay off more people. Fourteen thousand jobs out of about 350,000 corporate roles is relatively small. When you look at Walmart, they’ve said their head count will be flat three years from now because of AI. Amazon’s head count is still growing year to date.
Their peers — Walmart, Microsoft — are posting much better margins. Amazon isn’t as efficient, and it should be. There’s probably more to come. Obviously, you can’t cut the people delivering packages or managing logistics — the robots aren’t ready for that yet — but there’s more room for efficiency.
Andy Jassy, being a software guy who ran AWS, likes big margins, and we like him as CEO. I don’t want anyone to lose their job, but compared with peers, other companies can do more with less. Across tech, companies like Palantir are saying they’ll lay off 1,000 people and still grow revenue tenfold. There’s a big shift happening.
My gut says this probably isn’t the last round of layoffs. AI will let us do more with less — it’s not taking jobs, but it means we may need fewer to get the same work done. I’d keep a close eye on that. Amazon can tighten things up and become more operationally disciplined going forward.
MERELLA: All right, Brent, we’ll leave it there. Thanks for your time.
BRENT: Thank you.
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This BNN Bloomberg summary and transcript of the Oct. 30, 2025 interview with Brent Thill are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
