• by Sarah Mahoney , Yesterday

Amazon blew past expectations in the second quarter, buoyed by resilient consumer spending and another burst of advertising momentum. Its ad business surged 22% to $15.69 billion, as brands doubled down on retail media. Meanwhile, steady demand for essentials — and a return to discretionary purchases — drove overall revenue up 13%, offering fresh evidence that consumer confidence remains stable. But the Seattle-based company’s forecast came in lower than expected, and many observers felt that the fast-growing AWS is losing ground to competitors.

Net sales increased 13% to $167.7 billion in the second quarter, compared with $148 billion in the second quarter of 2024. In North America, where many have worried about the financial health of consumers, sales climbed an impressive 11% year over year to $100.1 billion. And operating income grew to $19.2 billion, compared with $14.7 billion in the second quarter of 2024.

Amazon CEO Andy Jassy said the retailer hasn’t yet seen a measurable impact from tariff uncertainty, despite widespread concern about rising costs and consumer pullback. Much of the speculation around pricing effects has been “wrong and misreported,” he said on the earnings call webcast for investors. He notes that it’s still unclear where tariff levels will land — or who will ultimately absorb those costs once forward-bought inventory runs out.

Meanwhile, Amazon continues to push into perishables, expanding a pilot program that offers fresh items for same-day delivery alongside other goods. About 75% of perishables customers in 2024 were first-time shoppers, and 20% reordered within a month — early signals of strong demand. Jassy also highlighted gains in everyday essentials and name-checked the return of Nike to the platform, as well as new premium brands like Aveda, Marc Jacobs, and Stella McCartney.

This year’s Prime Day was the company’s biggest yet, with record sales, item volume, and new Prime signups.

The company’s ad innovations during the period include an integration with Roku, which provides advertisers with access to the largest authenticated connected TV footprint in the U.S., reaching an estimated 80 million households. Jassy called the partnership “momentous… It's a giant leap forward for advertisers, bringing best-in-class planning, audience, precision and performance to TV advertising.”

The division also announced an integration between Disney's real-time Ad Exchange and Amazon, allowing advertisers to gain direct access to Disney's premium inventory across platforms such as Disney+, ESPN, and Hulu, while leveraging insights from both companies.

Scott Devitt, an analyst who covers Amazon for Wedbush, notes that those ad results are significantly ahead of Wall Street's predictions of $15 billion. “Advertising delivered robust growth in the quarter, which we believe has been overlooked,” he writes. “Improvements to Amazon's demand-side platform have led to a more competitive offering relative to other platforms and should continue to attract incremental advertising revenue as Amazon offers more inventory through its properties and partners.”

At AWS, the company’s cloud division, sales surged to $30.9 billion. While that represents a 18% gain, many in the industry expected Amazon to do even better, and Amazon shares declined after the earnings release. Devitt, while noting “the rising perception of AWS as a laggard in the AI space,” thinks the division is still on track for solid gains.