Amazon.com Inc Earnings - Q4 2025 Analysis & Highlights
Amazon reported strong Q4 2025 results driven by accelerating AWS growth, expanding retail operations, and significant investments in AI infrastructure and emerging technologies including satellite internet and quick commerce.
Key Financial Results
Worldwide revenue reached $213.4 billion, representing 12% year-over-year growth excluding favorable foreign exchange impacts of 150 basis points.
Operating income was $25 billion for Q4 2025.
Trailing 12-month free cash flow totaled $11.2 billion.
Full year 2025 operating cash flow increased to $139.5 billion, up 20% year-over-year, driven primarily by improved operating income and changes in working capital.
Worldwide paid units grew 12% year-over-year, representing the highest quarterly growth rate in 2025.
Operating income included three special charges totaling $2.4 billion: $1.1 billion for tax dispute resolution and lawsuit settlement in Italy, $730 million for estimated severance costs, and $610 million for asset impairments primarily related to physical stores.
Business Segment Results
AWS Segment
AWS revenue was $35.6 billion with 24% year-over-year growth, the fastest growth rate in 13 quarters.
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 with an operating margin of 35%, up 40 basis points year-over-year.
AWS added more than 1 gigawatt of capacity in Q4 and added more data center capacity than any other company in 2025.
Bedrock is now a multi-billion dollar annualized run rate business with customer spend growing 60% quarter-over-quarter.
Trainium chips represent a multi-billion dollar annualized revenue run rate business with 100,000+ companies using it, growing at triple-digit percentages year-over-year, with 1.4 million Trainium2 chips landed as the fastest ramping chip launch ever.
Trainium3 launched with 40% better price performance than Trainium2, with nearly all supply expected to be committed by mid-2026.
Graviton is a multi-billion dollar annualized run rate business growing more than 50% year-over-year, with 40% better price performance than leading x86 processors and used by over 90% of AWS's top 1,000 customers.
AWS backlog reached $244 billion, up 40% year-over-year and 22% quarter-over-quarter.
North America Segment
North America revenue was $127.1 billion, an increase of 10% year-over-year.
North America operating income was $11.5 billion with an operating margin of 9%, up from 8% in Q4 2024.
US Prime members received over 8 billion items same or next day, up more than 30% year-over-year, with groceries and Everyday Essentials comprising half of total items.
Everyday Essentials grew nearly twice as fast as all other categories in the US, representing one out of every three units sold.
Amazon is now a go-to grocery destination for over 150 million Americans with over $150 billion in gross sales, mostly through online shopping and Whole Foods.
Same-day delivery is the fastest growing delivery offering with nearly 100 million customers using it in the US last year.
Add to Delivery feature already makes up about 10% of all Prime volume fulfilled through the Amazon network each week, just six months after launch.
Rufus shopping assistant was used by more than 300 million customers in 2025, with users 60% more likely to complete a purchase.
Lens visual search tool usage increased 45% year-over-year.
International Segment
International revenue was $50.7 billion, an increase of 11% year-over-year excluding foreign exchange impacts.
International operating income was $1 billion with an operating margin of 2.1%, with margins expanding year-over-year excluding special charges.
Amazon Ads
Advertising revenue was $21.3 billion, growing 22% year-over-year.
Amazon added over $12 billion of incremental advertising revenue in 2025 alone.
Prime Video ads are now available in 16 countries and contributed meaningfully to revenue growth, with an average ad-supported audience of 315 million viewers globally, up from 200 million in early 2024.
Capital Allocation
Amazon expects to invest approximately $200 billion in capital expenditures across the company, predominantly in AWS, due to high demand and the ability to monetize capacity as fast as it is installed.
AWS added 3.9 gigawatts of power in the last 12 months, which is twice what the company had in 2022 when operating at an $80 billion annual run rate business.
AWS expects to double power capacity again by the end of 2027.
Amazon Leo satellite program will incur approximately $1 billion in year-over-year cost increase in Q1 2026 within the North America segment, with more than 20 launches planned in 2026 and more than 30 in 2027.
Most Amazon Leo costs are currently expensed as incurred, with satellite manufacturing and launch services expected to be capitalized later in the year.
Industry Trends and Dynamics
AWS growth accelerated to 24% year-over-year on a $142 billion annualized run rate, demonstrating that AWS is growing faster than competitors despite operating at a much larger scale.
Core non-AI workloads continue to show strong growth as enterprises return to focusing on moving infrastructure from on-premises to the cloud.
AWS continues to earn most of the big enterprise and government transitions to cloud, with recent major agreements announced including OpenAI, Visa, NBA, BlackRock, Perplexity, Lyft, United Airlines, DoorDash, Salesforce, US Air Force, Adobe, Thomson Reuters, AT&T, S&P Global, National Bank of Canada, The London Stock Exchange, Choice Hotels, Accenture, Indeed, HSBC, and CrowdStrike.
More of the top 500 US startups use AWS as their primary cloud provider than the next two providers combined.
AI market demand is characterized as a "barbell market" with AI labs consuming significant compute on one end and enterprises gaining value from productivity and cost avoidance workloads on the other, with enterprise production workloads in the middle potentially becoming the largest and most durable segment.
Customers are realizing they need choice in AI models, with most sophisticated AI applications leveraging multiple models including frontier models like Anthropic's Claude, open models like Mistral or Llama, and specialized models like Amazon Nova.
Customers are starving for better price performance in AI chips, with the dominant early leaders not prioritizing cost reductions.
Quick commerce is growing rapidly, with Amazon Now launched in India, Mexico, and the UAE delivering thousands of items in approximately 30 minutes or less, with customer response in India exceeding expectations and Prime members tripling shopping frequency.
Thursday Night Football on Prime Video achieved 15 million average viewers, a 16% year-over-year increase and third consecutive year of double-digit growth, with the Packers versus Bears Wild Card game becoming the most streamed NFL game in history with 31.6 million viewers.
Competitive Landscape
Amazon is America's lowest price retailer for the ninth straight year, with prices 14% lower on average than other major online retailers according to a Profitero study.
AWS has the broadest functionality, strongest security, operational performance, and most vibrant partner ecosystem compared to competitors.
Graviton custom CPU silicon is 40% more price performant than leading x86 processors and is used expansively by over 90% of AWS's top 1,000 customers.
Trainium2 is 30% to 40% more price performant than comparable GPUs, providing customers with better price performance than competitors' offerings.
Trainium3 is up to 40% more price performant than Trainium2, with very strong demand expected.
Amazon's custom silicon strategy in Trainium and Graviton provides both customers with better price performance and Amazon with better economics compared to relying on third-party chips.
Horizontal shopping agents lack shopping history and frequently get product details and pricing wrong, while Amazon's Rufus shopping assistant has access to comprehensive shopping history and accurate data.
Macroeconomic Environment
Results are inherently unpredictable and may be materially affected by fluctuations in foreign exchange rates and energy prices, changes in global economic and geopolitical conditions, tariff and trade policies, resource and supply volatility including for memory chips, and customer demand and spending including the impact of recessionary fears, inflation, interest rates, regional labor market constraints, world events, the rate of growth of the Internet, online commerce, cloud services and new and emerging technologies.
Guidance assumes no additional business acquisitions, restructurings, or legal settlements.
Growth Opportunities and Strategies
AI and Machine Learning
Amazon is investing aggressively in AI across all business segments, with over 1,000 AI applications either deployed or in the process of being built internally.
Nova Forge was launched to give customers early checkpoints on Amazon Nova models, allowing them to securely mix proprietary data with model data in the pre-training stage to create customized model versions.
Bedrock AgentCore was launched to enable enterprises to securely and scalably deploy agents by connecting to compute, data, tools, memory, identity, policy governance, and performance monitoring.
Frontier Agents were launched at AWS re:Invent to enable autonomous agents that can run persistently for hours or days, scale out quickly, and remember context, including Kiro Autonomous Agents for coding, AWS DevOps Agents, and AWS Security Agents.
Kiro coding assistant saw developer usage grow more than 150% quarter-over-quarter.
Ads Agent lets brands use AI to create and optimize campaigns at-scale, implement effective campaign targeting, and quickly create actionable insights.
Creative Agent lets advertisers research, brainstorm, and generate full-funnel ad campaigns from concept to completion, transforming a weeks-long process into just hours.
Retail Expansion
Amazon expanded selection with more than 400 new beauty brands in the US in 2025, including Bobbi Brown Cosmetics, Charlotte Tilbury, and Laura Mercier, and new fashion brands like Away Luggage, Converse, Diesel, Michael Kors, Nike, and The North Face.
Amazon Haul 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.
Amazon plans to expand perishable grocery delivery to many more communities in 2026 and plans to open more than 100 new Whole Foods Market stores over the next few years.
Amazon achieved fastest ever delivery speeds for Prime members around the world in 2025, delivering nearly 70% more items same day than the year before in the US.
Rural customers are receiving same-day delivery at nearly two times more average monthly customers year-over-year.
Amazon Now ultra-fast delivery service is being tested in several communities in the US and UK after launching in India, Mexico, and the UAE.
Emerging Technologies
Amazon Leo satellite internet service has launched 180 satellites with more than 20 launches planned in 2026 and more than 30 in 2027, expecting to launch commercially in 2026.
Leo Ultra enterprise-grade customer terminal delivers simultaneous download speeds of up to 1 gigabit per second and upload speeds of up to 400 megabits per second.
Leo will offer enterprise-grade performance and advanced encryption with secure private networking that bypasses public internet and connects directly to AWS.
Amazon Leo has dozens of commercial agreements already signed, including with AT&T, DirecTV Latin America, JetBlue, and Australia's National Broadband Network.
Alexa+ was made available to all customers in the US, free for Prime members and $19.99 per month for non-Prime members, with new chat experience at Alexa.com, redesigned mobile app, and new integrations with third-party devices.
Fulfillment Network Optimization
Regionalization of the US fulfillment network has improved local inventory placement, leading to faster delivery and lower costs, with the number of regions extended from eight to ten.
Amazon has over 1 million robots in its fulfillment network handling various functions, with plans to expand robotics capabilities further while maintaining significant human employment.
Amazon is making significant progress in getting more units into each box, which saves shipments and drives better operating income.
Financial Guidance and Outlook
Q1 2026 net sales are expected to be between $173.5 billion and $178.5 billion, with guidance anticipating a favorable impact of approximately 180 basis points from foreign exchange rates.
Q1 2026 operating income is expected to be between $16.5 billion and $21.5 billion.
Management expects AWS operating margins to fluctuate over time, driven in part by the level of investments being made at any point in time.
International segment will continue to invest more in the stores business to enhance customer experience and encourage retail demand to move online more quickly, including bringing faster delivery options like Amazon Now.
Amazon will continue to work hard to stay sharp on pricing and seller fees, with some countries requiring more aggressive pricing to meet or beat competitor prices.
Management believes investments in retail expansion, quick commerce, and faster delivery will delight customers, grow the business, and generate long-term positive return on invested capital.
AWS is expected to continue adding significant EC2 core computing capacity each day, with the majority of new compute using custom CPU silicon Graviton.
Amazon expects to continue optimizing inventory placement, reducing distance traveled, reducing touches per package, and improving package consolidation in the global fulfillment network.
