Quick News Overview

  • Amazon is closely monitoring the macroeconomic environment, including the impact of tariffs, Chief Financial Officer Brian Olsavsky said on the May 1 earnings call.
  • The company's first-quarter net sales increased 9% year-over-year to $155.7 billion, compared with $143.3 billion in the same period last year. However, Olsavsky noted that macroeconomic uncertainty stemming from the Trump administration's tariff policies has cast a shadow over the second-quarter outlook.
  • "We are preparing for a range of possible outcomes and have taken multiple actions to protect the customer experience," the finance chief said on the call. "We are doing everything we can to keep prices low for customers in an economically rational way." The online retail giant considered displaying tariff surcharges on some products in late April, a move that drew an angry response from President Donald Trump, according to reports from CNN and other media outlets.

In-Depth Analysis

Amazon is one of several major tech companies to report earnings in recent weeks. Although the industry overall posted strong growth in the latest earnings season, there are "significant differences" among companies, according to a Zacks Investment Research report. The report showed Amazon's earnings grew 42.6% year-over-year last quarter, compared with 46% for Alphabet, 4.8% for Apple, and -56.8% for Tesla.

For Amazon's part, CEO Andy Jassy said on Thursday's earnings call that no "falloff" in demand has been seen yet due to the Trump administration's tariff announcements. Jassy said, "To some extent, we are seeing increased purchasing in certain categories, which may indicate consumers are stocking up ahead of potential tariff impacts. We also haven't seen a notable increase in average selling prices for retail goods. This partly reflects our forward purchasing in our own retail sales and third-party sellers sending inventory in early, but a significant portion is because most sellers haven't adjusted pricing yet. Of course, this could change as tariffs are finalized."

Amazon is not the only tech company to recently warn of Trump tariff risks. Apple CEO Tim Cook said on Thursday's earnings call that the tariff impact is currently "limited" as the company focuses on optimizing its supply chain and inventory. However, Apple estimates that assuming current global tariff rates, policies, and their application remain unchanged for the rest of the quarter with no new tariffs, the impact next quarter would be approximately $900 million. Cook said, "For our part, we will continue to manage the company as we always have, with thoughtful decisions, a focus on long-term investment, and a commitment to innovation and its possibilities."

Meanwhile, Tesla CFO Vaibhav Taneja said on the April 22 earnings call that the company faces short-term challenges in its business due to tariffs and brand image issues. Tesla CEO and Trump ally Elon Musk also weighed in: "I advocate for a predictable tariff structure, and overall, I support free trade and lower tariffs." He added that Trump is "the people's elected representative and fully entitled to do what he wants." Beyond tariff impacts, the company also faces growing backlash due to Musk's central role in the Department of Government Efficiency.

Earlier this year, the sudden rise of Chinese tech startup DeepSeek dealt a heavy blow to big tech stocks. The company released an open-source AI model that it claims was built at a fraction of the cost of American competitors like ChatGPT, drawing global attention. DeepSeek's rise raised questions about U.S. dominance in global AI. Trump's recent tariff announcements have further intensified the pressure and uncertainty facing big tech companies ahead of the latest earnings season. "Entering the first-quarter earnings season, there was enormous uncertainty, with tariff storms and trade war concerns hanging over the tech sector like a dark cloud," Wedbush analysts said in a Sunday client note.

According to Zacks' analysis, Apple is most significantly affected by tariffs. The report said the iPhone maker's "underperformance is more related to its China exposure than anything else." IDC analysts noted in a report last month that the government's rapidly changing trade and tariff policies have brought "significant instability" to the information technology market. Amazon, Apple, Microsoft, Alphabet, Meta, Nvidia, and Tesla—also known as the "Magnificent Seven"—collectively saw more than $1 trillion in market value wiped out in Wall Street trading on April 3, the day after the Trump administration announced sweeping reciprocal tariffs on multiple countries, according to CNBC. The U.S. has begun negotiations with several countries that received a 90-day reprieve from high reciprocal tariffs on April 9, according to the White House. A 10% baseline tariff remains on goods from most U.S. trading partners, while tariffs on Chinese imports remain at 145%.

Despite tariff concerns, Wedbush analysts said in a client note that the latest earnings season from big tech has brought "incremental confidence" to Wall Street, as companies like Amazon reported solid revenue figures while increasing AI spending. "Are tariffs a concern for big tech? Yes... But they haven't shut down the AI party, and the music is still blaring on the dance floor," they wrote.