Amazon expected to deliver solid Q1 results but outlook may reflect tariff pressures

Amazon.com Inc (NASDAQ:AMZN) shareholders should be expecting strong results and upbeat commentary from management when the company reports its first quarter earnings after markets close, according to analysts at Bank of America.

That said, analysts at the bank warned uncertainty about tariffs and macroeconomic pressures that could weigh on the company’s second-quarter guidance.

The bank’s analysts forecast Q1 sales of $155.5 billion and earnings before interest and taxes (EBIT) of $17.8 billion, slightly above the Street’s estimates.

Analysts noted that the consumer held up relatively well in 1Q despite tariff headlines, supported by data showing that online spending decelerated only slightly.

For Amazon Web Services (AWS), Bank of America believes Street estimates for 17.4% year-over-year growth are achievable, highlighting that CEO Andy Jassy indicated intra-quarter that AI demand remains “insatiable.”

Looking ahead to the second quarter, Bank of America says that Amazon is "entering unchartered (and tariffed) seas."

The biggest focus for the earnings call will be tariffs and their impact on future inventory, average selling prices, margins and offsets. Analysts see mitigating factors, including shifting supply chains, Amazon's third-party market reducing the impact, and the recent expansion of its inbound network.

The analysts expect Amazon to guide Q2 revenues between $154 billion and $160 billion and operating income between $12 billion and $17 billion. Opearting income guidance is expected to be below the Street estimate of $17.5 billion, with the lower-end reflecting tariff uncertainty and usual management Q2 conservatism.

“[The] Street may look past lowest downside scenario given historical profit beats and share gain potential,” analysts wrote.

Despite near-term headwinds, Bank of America remains constructive on the stock, pointing to recent management commentary. "We have been encouraged by recent CEO comments that Amazon had not 'seen meaningful impact yet from all the noise around the tariffs' and VP of infrastructure comments on 'strong demand for both Generative AI and foundational workloads',” they wrote. 

They believe Amazon remains well-positioned to take share in eCommerce, improve retail margins through headcount cuts, and capitalize on cloud AI demand.

The analysts have a ‘Buy’ rating and $225 price target on Amazon. Shares traded down 3% at $190 on Thursday afternoon. 

- Updated with share price movement -