Online retailer Amazon reported a 18% jump to $US13.9 billion in advertising sales for the March quarter as it prepares for fallout from the trade war.
This compared to overall net revenue which increased 9% to $155.7 billion.
”We’re pleased with the start to 2025, especially our pace of innovation and progress in continuing to improve customer experiences,” said CEO Andy Jassy.
“From Alexa+ (our next generation of Alexa that’s meaningfully smarter, more capable, and takes actions for customers), to another delivery speed record for our Prime members, to our new Trainium2 chips and Bedrock model expansion that make it easier for AWS customers to train models and run inference more flexibly and cost-effectively, to our first Project Kuiper satellites successfully launching into low earth orbit in our quest to provide broadband access to hundreds of millions of households in rural areas without it today—we’re continuing to find meaningful ways to make customers’ lives easier and better every day.”
Emarketer principal analyst Sky Canaves said Amazon advertising remains vulnerable to cuts in spending from the many small and mid-sized sellers who will be most squeezed by tariffs on goods from China, and revenue growth from the third party marketplace has slowed significantly from the levels of just a few quarters ago.
“Amazon will have to bolster ad commitments from larger and non-endemic advertisers via channels like Prime Video to offset this trend,” said Canaves.
"Amazon was able to beat its conservative guidance for Q1 as customers have been pulling forward demand to stock up on goods before anticipated price hikes. Guidance for Q2 is again on the cautious side given the high levels of uncertainty around tariffs.
“Though Amazon bears heavy long-term exposure to tariffs on Chinese imports, the company remains better positioned than most in the retail industry to steer its way through the current wave of disruption and to maintain above-average ecommerce sales growth for 2025.
“Its core retail business boasts a strong set of structural advantages, including sharp pricing, fast delivery, and a vast product selection that’s seen rapid growth in essential categories. Amazon’s announcement earlier today on expanding its rural delivery network highlights a readiness to capture overlooked growth opportunities.
“Amazon will also benefit from the end of the de minimis tariff exemption that allowed Chinese ecommerce platforms like Temu and Shein to ship directly to US consumers without paying import duties. As Temu and Shein raise prices, they will lose a lot of their appeal to customers.
“The slight miss in the AWS business is concerning given its outsize role as a profit driver, and the big question will be whether Amazon will trim any of its $100 billion planned capex spending this year.”
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