Amazon Set to Report Q3 Earnings: Should Investors Buy the Stock?

Amazon AMZN is scheduled to report third-quarter 2025 results on Oct. 30.For the third quarter, Amazon expects net sales between $174 billion and $179.5 billion, or to grow in the range of 10-13% compared with third-quarter 2024. This guidance anticipates an unfavorable impact of approximately 130 basis points from foreign exchange rates.The Zacks Consensus Estimate for net sales is pegged at $177.88 billion, indicating growth of 11.96% from the prior-year quarter’s reported figure.The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.58 per share, which indicates growth of 10.49% from the year-ago quarter.Image Source: Zacks Investment ResearchThe company has been benefiting from its dominant position in the e-commerce and cloud markets. It is also riding on strengthening generative AI capabilities.AMZN’s Earnings Surprise HistoryAmazon has an impressive earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 26.32%. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 22.98%.Amazon.com, Inc. Price and EPS Surprise Amazon.com, Inc. price-eps-surprise | Amazon.com, Inc. QuoteEarnings Whispers for AMZNOur proven model predicts an earnings beat for Amazon this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.AMZN has an Earnings ESP of +12.61% and carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Factors Shaping AMZN’s Q3 ResultsAs Amazon prepared to report its third-quarter 2025 earnings, multiple catalysts positioned the company for solid performance across its diversified business segments. The e-commerce and technology giant entered the quarter with momentum from its second-quarter results, which delivered $167.7 billion in net sales, representing 13% year-over-year growth. Amazon's international operations showed resilience with strategic expansion initiatives. The company expanded Prime Day to Ireland for the first time in 2025, broadening its European footprint. The company expanded Alexa+ Early Access to millions of customers during the quarter and increased Project Kuiper's satellite Internet fleet with successful launches.AWS and AI Infrastructure Expansion Drives Growth in Q3Amazon Web Services demonstrated resilience in the second quarter with revenues reaching $30.87 billion, up 17.5% year over year, though the growth rate trailed competitors. Our model estimate for third-quarter AWS revenues indicates 18.4% year-over-year growth to $32.49 billion in the to-be-reported quarter. The third quarter is likely to have benefited from significant AI infrastructure investments, including AI-related expenditures. This is expected to have strengthened AWS' competitive positioning in the rapidly expanding AI infrastructure market against its strong contenders like Microsoft MSFT, Alphabet GOOGL and Oracle ORCL.AWS announced new innovations at the AWS Summit in New York during July, introducing Amazon Bedrock AgentCore to enable organizations to deploy and operate secure AI agents at enterprise scale, alongside an additional $100 million investment in the AWS Generative AI Innovation Center to boost agentic AI development. The company also introduced Amazon Nova customization capabilities in Amazon SageMaker AI, enabling customers to build with higher accuracy and flexibility, which positioned AWS to capture growing enterprise AI adoption in the third quarter. AWS expanded its model offerings with the addition of Qwen 3 foundation models and DeepSeek-V3.1 in September, featuring both mixture-of-experts and dense architectures to support diverse use cases.Advertising Revenue GrowthAmazon's advertising business demonstrated robust momentum entering the third quarter, having generated $15.69 billion in the second quarter of 2025, representing 23% year-over-year growth. The company introduced significant advertising innovations during Amazon Accelerate 2025, including making Amazon Marketing Cloud directly accessible through the Amazon Ads Console starting Sept. 16, 2025, with pre-built, no-code templates and AI assistance. These enhancements enabled advertisers to analyze campaign performance and build high-intent audiences in real-time without requiring SQL knowledge, accelerating decision-making capabilities.The advertising platform benefited from the continued expansion of full-funnel capabilities across Prime Video, live sports, and other entertainment properties. The company maintained an average ad-supported audience of more than 300 million consumers in the United States, providing significant scale for brand partners. The integration of AI-powered video generation tools and enhanced DSP offerings strengthened Amazon's competitive positioning in the digital advertising market against Meta and Google.E-commerce and Prime Membership Momentum in Q3Amazon's summer Prime Day extended to four days for the first time, running from July 8-11, 2025, and spanning 26 countries, including new markets in Ireland and Colombia. The event resulted in record sales with more items sold compared to any previous four-day period that included a Prime Day event, driving U.S. e-commerce sales of $24.1 billion. The extended format showed momentum building throughout the event, with Day 3 sales jumping 165% compared to the equivalent Prime Day period in 2024.Amazon announced that Prime Big Deal Days would return on Oct. 7-8, 2025, providing a significant catalyst within the third quarter to kick off the holiday shopping season. The October event offered Prime members exclusive deals on holiday gift items across more than 35 categories, leveraging AI shopping tools, including Rufus, Amazon Lens, and the enhanced Alexa+ voice assistant to improve customer experience.Third-party seller services remain a significant growth driver with model estimates pegged at $41.7 billion, indicating a 10.2% year-over-year increase. The company's focus on expanding selection with premium brands and enhancing delivery capabilities positioned the segment for continued growth in the third quarter.Physical Stores and Grocery ExpansionAmazon's physical retail operations are expected to show healthy growth, with model estimates projecting physical store sales of $5.53 billion, indicating a 5.9% year-over-year increase. Amazon executed one of its most significant grocery expansions in August 2025, launching same-day delivery of perishable groceries in more than 1,000 cities and towns, with plans to reach more than 2,300 locations by year-end. The service integrated thousands of perishable food items, including produce, dairy, meat, seafood, and frozen foods, into Amazon's existing Same-Day Delivery network, enabling customers to order groceries alongside other products in a single checkout.For Prime members, same-day grocery delivery remained free for orders over $25 in most cities, with a $2.99 fee for orders below that minimum. Early adoption data from pilot markets showed strong customer engagement, with many first-time grocery customers returning to shop twice as often compared to those who didn't purchase perishable food items. This expansion strengthened Amazon's competitive positioning against Walmart, Instacart, and traditional grocery retailers heading into the critical fourth-quarter holiday period.Online Stores PerformanceThe online stores segment was positioned for solid performance in the third quarter, supported by enhanced product discovery tools and expanded selection. Our model estimate for revenues from online stores is pegged at $66.3 billion, indicating an 8% year-over-year increase. The company launched generative AI tools to enhance the shopping experience, including features to turn product summaries and reviews into audio clips and automated listing enhancement capabilities.The integration of AI-powered shopping features, particularly the Rufus shopping assistant and AI Shopping Guides, simplified product research and improved conversion rates. The continued optimization of inventory placement and delivery speeds, combined with the expansion of everyday essentials offerings, supported customer satisfaction and increased purchase frequency throughout the quarter.AMZN Price Performance & Stock ValuationShares of Amazon have gained 3.6% in the year-to-date period compared with the broader Zacks  Retail-Wholesale sector and the S&P 500 index’s return of 7.7% and 18.3%, respectively.AMZN’s Year-to-Date PerformanceImage Source: Zacks Investment ResearchNow, let’s look at the value Amazon offers investors at current levels. AMZN is trading at a premium with a forward 12-month P/S of 3.14X compared with the Zacks Internet - Commerce industry’s 2.23X, reflecting a stretched valuation.AMZN’s P/S F12M Ratio Depicts Stretched ValuationImage Source: Zacks Investment ResearchInvestment ThesisAmazon represents a compelling buy opportunity ahead of third-quarter 2025 earnings, despite premium valuation and intense competition. The company's strategic initiatives position it for robust growth: AWS' leadership in agentic AI through Bedrock AgentCore strengthens enterprise dominance, while advertising revenues accelerate at 23% annually. The transformative same-day grocery expansion across 1,000+ cities disrupts traditional retail, deepening Prime ecosystem engagement. Record-breaking Prime Day performance and October's Prime Big Deal Days drive momentum into the holiday season. Multiple growth engines — cloud computing, digital advertising, e-commerce innovation, and logistics infrastructure — create diversified revenue streams that justify premium multiples and support long-term shareholder value creation.ConclusionAmazon's third-quarter 2025 results are poised to demonstrate the company's exceptional execution across diversified growth drivers. Strategic investments in AI infrastructure, advertising innovation, and grocery expansion position Amazon to capture significant market share gains. With multiple catalysts converging, including AWS' agentic AI leadership and record Prime Day momentum, investors should capitalize on this compelling opportunity before the earnings release.Quantum Computing Stocks Set To SoarArtificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.Access the Report Free Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report Oracle Corporation (ORCL): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks