AWS’s Wet the Bed Moment Turns Investors Sour Despite Earnings Beat…

I’ve said it before, but I think I speak for all of us when I say, “Jeff Bezos called it…” 

Amazon beat earnings expectation… and yet, the market responded by grabbing Elon’s flamethrower and setting shares on fire. Prices have dropped -7.84% on the day, primarily because AWS… Amazon’s AI messiah-in-waiting… showed up late, underdressed, and drooling in the corner. 

(Source: Giphy) 

For more context, AWS grew 17.5% to $30.9 billion. And that’s the problem. Compare that to Azure and Google Cloud who just boomed 39% and 32% in revenue… and suddenly AWS looks like Uncle Rico telling everyone how far he can throw the dang football over that mountain. However, nobody cares. The glory days are over, and now AWS margins are down to 32.9%, their lowest since Q4 of last year. Ooof. 

(Source: Reuters) 

Of course, investors were expecting fireworks, AI blowouts, and profit margins so thicc they could choke a bull.  Instead, they got a press call where Andy Jassy basically shrugged and said, “We’re still in the lead… probably.” Great. So is Blockbuster if you don’t count the birth of Netflix. But, but, but… don’t you worry, because Andrew Jassey & the Boys aren’t taking this lying down. How? By throwing money at the problem… specifically, $118 billion in capex this year. All for the one simple goal to build more data centers and AI infrastructure in hopes that someday soon, something vaguely profitable might fall out. 

(Source: CNBC) 

Meanwhile, Meta’s printing on AI-driven targeting. Microsoft has AI copilots in Excel with the market rewarding these two heavily for their efforts. Perhaps you’ve heard? Hell, even Google is snappin’ necks and cashin’ checks with a functioning Gemini suite. But Amazon? They’re still talking about “foundational models” as if they’re not in a $2 trillion business in a knife fight with competitors. To be fair though, on the retail side, sales were solid. $61.5 billion online, up 11%. Ad revenue up 23%. But still, it’s background noise  when your main profit engine is sputtering and farting fumes. And with Trump lobbing tariff grenades across the Pacific and extending the Mexico duties another 90 days, even the retail growth has a timer on it.

(Source: Giphy) 

Additionally, Amazon is dusting off the layoff guillotine. Down 14,000 heads this quarter… across AWS, books, devices, podcasts. All the nonessential limbs have been severed to keep the core warm. Not to mention the fact that those 2 million marketplace sellers that give Amazon its magical inventory resilience are all about to play chicken with rising costs. Sure, some will eat the tariffs, but others will pass them on to consumers. Either way, it doesn’t offset or calm the nerves of a slowing AWS growth. 

So yeah, Amazon beat… but it didn’t beat it hard enough. And in 2025, “just good” is the new “GTFO”, especially when Microsoft and Google are slapping the table with 40% cloud growth and whispering infinite AI margins. Of course, as of right now, AWS is still "allegedly" the leader… but the gaping hole is closing fast. And Amazon just blinked.

(Source: Giphy) 

Meaning, keep your eyes on this story, because if Amazon doesn’t deliver something that looks, smells, or prints like AI dominance in the next two quarters, the market will hand the board a nice box of Prime-branded “You’re Cooked” apparel. So with that, place your bets accordingly, and have one helluva weekend. Until next time, friends… 

At the time of publishing, Stocks.News holds positions in Amazon, Meta, Microsoft, and Alphabet as mentioned in the article.