Amazon.com Inc Earnings - Q4 2025 Analysis & Highlights
Amazon.com Inc. (AMZN) reported strong Q4 2025 financial results, with significant growth in AWS and advertising revenue, alongside continued expansion in its retail business driven by faster delivery speeds and AI innovations. The company is making substantial investments in AI and infrastructure, particularly in AWS, anticipating strong long-term returns on invested capital.
Key Financial Results
Worldwide revenue was $213.4 billion, an increase of 12% year-over-year, excluding a 150 basis point favorable impact from foreign exchange.
Worldwide operating income was $25 billion in Q4 2025.
Operating income included three special charges totaling $2.4 billion.
Trailing 12-month free cash flow was $11.2 billion.
Full-year operating cash flow increased to $139.5 billion in 2025, up 20% year-over-year.
Worldwide paid units grew 12% year-over-year, marking the highest quarterly growth rate in 2025.
Worldwide third-party seller unit mix was 61% in Q4.
Business Segment Results
North America Segment
North America segment revenue was $127.1 billion, an increase of 10% year-over-year.
North America segment operating income was $11.5 billion, with an operating margin of 9%, up from 8% in Q4 2024.
International Segment
International segment revenue was $50.7 billion, an increase of 11% year-over-year, excluding the impact of foreign exchange.
International segment operating income was $1 billion, with an operating margin of 2.1%.
Excluding special charges, International segment operating margins also expanded year-over-year.
AWS Segment
AWS revenue was $35.6 billion, with growth accelerating to 24% year-over-year.
AWS added $2.6 billion in quarter-over-quarter revenue and now has an annualized revenue run rate of $142 billion.
AWS operating income was $12.5 billion.
AWS operating margin was 35% through Q4, up 40 basis points year-over-year.
Advertising
Advertising revenue grew 22% in the fourth quarter, adding over $12 billion of incremental revenue in 2025 alone.
Prime Video ads are now available in 16 countries and are contributing meaningfully to revenue growth.
Prime Video has an average ad-supported audience of 315 million viewers globally, up from 200 million in early 2024.
Capital Allocation
Amazon expects to invest about $200 billion in capital expenditures, predominantly in AWS.
AWS added more data center capacity in 2025 than any other company in the world.
In the last 12 months, Amazon added 3.9 gigawatts of power, twice what it had in 2022, and expects to double it again by the end of 2027.
Industry Trends and Dynamics
Enterprises are returning to focusing on moving infrastructure from on-premises to the cloud.
There is strong demand for AI workloads, with customers wanting to run them where the rest of their applications and data are.
The cost of AI chips is a significant impediment, and customers are seeking better price performance.
The AI market is characterized by a "barbell market demand," with AI labs and a few runaway applications on one end, and enterprises using AI for productivity and cost avoidance on the other.
The middle of the barbell, representing enterprise production workloads and new AI-native businesses, is expected to be the largest and most durable segment.
Competitive Landscape
AWS continues to add more incremental revenue and capacity than others, extending its leadership position.
AWS continues to earn most of the big enterprise and government transitions to cloud.
More of the top 500 US startups use AWS as their primary cloud provider than the next two providers combined.
Graviton is up to 40% more price performance than leading x86 processors.
Trainium2 is 30% to 40% more price performance than comparable GPUs.
Trainium3 is up to 40% more price performance than Trainium2.
Amazon was America's lowest price retailer for the ninth straight year, 14% lower on average than other major online retailers.
Macroeconomic Environment
Amazon's results may be materially affected by factors including fluctuations in foreign exchange rates and energy prices, changes in global economic and geopolitical conditions, tariff and trade policies, resource and supply volatility, and customer demand and spending (including recessionary fears, inflation, interest rates, and labor market constraints).
Growth Opportunities and Strategies
Amazon sees incremental opportunities in AI, chips, low Earth orbit satellites, quick commerce, and serving more consumers' everyday essentials needs.
AWS is focusing on its broad, top-to-bottom AI stack functionality to gain AI share.
Amazon Bedrock is a multi-billion dollar annualized run rate business, with customer spend growing 60% quarter-over-quarter.
Nova Forge allows customers to securely mix their proprietary data with Amazon Nova models in the pre-training stage to create customized models.
Trainium and Graviton combined represent well over a $10 billion annualized run rate business.
Amazon plans to expand same-day delivery to many more communities in 2026 and open more than 100 new Whole Foods Market stores over the next few years.
Amazon Haul, an ultra-low priced offering, grew selection to over 1 million items under $10 and expanded to serve customers in more than 25 countries and regions.
Everyday Essentials grew nearly twice as fast as all other categories in the US in 2025, representing one out of every three units sold.
Amazon Now, an ultra-fast delivery service, is being tested in several communities in the US and UK, and has seen customers triple their shopping frequency in India.
Add to Delivery feature already makes up about 10% of all Prime volume fulfilled through the Amazon network each week.
Rufus, Amazon's Agentic AI shopping assistant, is rapidly expanding, with over 300 million customers using it in 2025.
Amazon Leo will bring connectivity to consumers, enterprises, and governments in areas without broadband, with 180 satellites launched and commercial launch expected in 2026.
Financial Guidance and Outlook
Q1 net sales are expected to be between $173.5 billion and $178.5 billion, anticipating a favorable impact of approximately 180 basis points from foreign exchange rates.
Q1 operating income is expected to be between $16.5 billion and $21.5 billion.
North America segment expects a year-over-year cost increase of approximately $1 billion related to Amazon Leo.
Amazon has more than 20 launches planned in 2026 and more than 30 in 2027 for Amazon Leo.
International segment will continue to invest more in its stores business to enhance customer experience and encourage online retail demand.
Amazon expects to double its power capacity again by the end of 2027.
