Amazon (AMZN) is set to report its Q2 earnings this week, along with other big tech firms. Wall Street is bullish on AMZN stock ahead of the report, and thinks that Amazon Web Services (AWS) could play a big role in a successful earnings period. Amazon is poised for strong earnings growth, driven by its retail and digital advertising sectors, and is making strategic moves into the AI wearable market with the acquisition of Bee. Analysts project a 14% increase in earnings for Amazon and for AWS to post stellar revenue. But, how much of a factor will AWS play in the report?
AWS has become the leader in the cloud computing market, giving Amazon a clear-cut winner. In Q1 2025, AWS generated $29.3 billion in revenues with an impressive 17% year-over-year increase, pushing the cloud division to a $117 billion annualized run rate. More significantly, AWS achieved an operating margin of 39.5%, marking the highest profitability level since at least 2014 and underscoring the division’s pricing power and operational efficiency.
AWS in Q2 2025: A Boost Coming For AMZN Stock?
Additionally, Amazon’s AWS division made several strategic updates in Q1 2025 that positioned the company to capitalize on surging enterprise AI demand. As the AI sector continues to dominate the US markets, Amazon has played into it well through AWS. The launch of Amazon Bedrock AgentCore represented a significant milestone, offering enterprises a comprehensive AI agent deployment platform with industry-leading runtime support of up to eight hours for complex workloads. The development received a warm reception from customers. As a result, positive momentum was felt in AMZN stock from investors.
Recently, analysts at Bank of America issued a new client note detailing several key indicators to look out for from the e-commerce giant’s earnings report. One of the most significant indicators of solid quarterly earnings will be AWS revenue. BofA expects AWS growth to continue accelerating at the back end of the year, giving investors potentially double upside from cloud and retail. In addition, operating returns on AWS services have been higher than its seasoned e-commerce business, signaling a major perspective shift.
Also Read: Amazon (AMZN) Stock Forecast Rises Before Q2 Earnings Report
Furthermore, year-to-date, Amazon (AMZN) stock is only up 3.7%. The stock has struggled this year, from Trump’s tariffs to trade wars and the mass stock market meltdown. Despite the odds, its valuation holds up and analysts remain bullish. On July 21, Baird analyst Colin Sebastian maintained an “Outperform” on the stock and raised the price target from $220.00 to a new target of $244.00. Those forecasts could be topped and quickly revised should AWS boost Amazon’s upcoming earnings report.
