Amazon (AMZN) will release its first-quarter financial results on Wednesday, April 29. AMZN stock has regained momentum ahead of earnings, rising 24% in a month. The rally in AMZN is supported by the company’s growing share in the artificial intelligence (AI) infrastructure market, cloud computing, and digital advertising.
AMZN stock got a boost after it announced that its in-house chip business is expanding rapidly. The company’s custom chips, including its Graviton processors, Trainium AI accelerators, and Nitro networking components, have collectively surpassed a $20 billion annual revenue run rate.
The tech giant’s custom chips reflect its strategic shift toward vertical integration within its cloud ecosystem. By designing its own silicon, the company is reducing reliance on third-party suppliers and improving cost efficiency. The move signals a structural advantage that could enhance margins in Amazon Web Services (AWS), its cloud business.
Partnerships in the AI space are further supporting Amazon’s growth. The company has deepened its relationship with Anthropic through an additional $5 billion investment while securing a long-term commitment from the startup to spend over $100 billion on AWS over the next decade. Similarly, Amazon has highlighted a significant commitment from OpenAI, reportedly exceeding $100 billion, which further validates the scale of enterprise demand for cloud-based AI infrastructure.
Beyond AI, Amazon continues to benefit from steady growth in its core cloud segment and a rapidly scaling advertising business. Advertising, in particular, remains a high-margin segment, supporting its earnings and investment case.
Amazon's Q1: Here’s What to Expect
Amazon is expected to deliver a solid first-quarter performance, driven by resilient e-commerce trends and accelerating momentum in its cloud and advertising segments. While the core retail business continues to expand at a steady pace, solid momentum in higher-margin divisions, including AWS and advertising, augurs well for growth.
AWS remains the key growth driver. The segment exited 2025 with solid strength, posting 24% growth in the fourth quarter compared to 20% in the previous quarter. This acceleration in AWS’s growth rate reflects strong enterprise demand for AI and traditional workloads.
A notable contributor within AWS is Amazon’s vertically integrated silicon strategy. Its in-house custom chip business is growing at an exceptional pace, starting to contribute meaningfully to AMZN’s growth. While AI workloads are a key demand driver for AMZN’s AWS, growth is not solely AI-dependent. Traditional enterprise migration remains robust, as companies continue shifting on-premise infrastructure to the cloud. AWS’s comprehensive service suite and extensive partner ecosystem continue to provide a competitive advantage and drive its growth.
Beyond cloud, Amazon’s advertising business is emerging as a critical profit lever. The segment delivered 22% growth in the fourth quarter and added more than $12 billion in incremental revenue over the course of 2025. As advertisers increasingly allocate budgets toward performance-based digital channels, Amazon’s ads business is well-positioned to deliver solid growth.
Looking ahead to the first quarter, management has guided for revenue in the range of $173.5 billion to $178.5 billion, with a midpoint implying approximately 13% year-over-year (YoY) growth. This outlook suggests continued top-line resilience across segments.
However, profitability may remain constrained in the near term. Elevated capital expenditures are expected to weigh on earnings. Analysts expect Amazon to report earnings of $1.61 per share, representing modest growth of roughly 1.2% YoY.
Will Q1 Power AMZN Stock Higher?
While heavy capital spending will likely weigh on AMZN’s profitability, the company’s first quarter will benefit from strong momentum in AI, cloud, and advertising businesses. Its aggressive investments in custom silicon and strategic partnerships position it well to deliver solid growth. At the same time, AWS and advertising provide durable growth engines, supporting the rally in its shares.
Analysts recommend a “Strong Buy” on AMZN stock ahead of the company's Q1 earnings release.
On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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