Everbright Securities: Amazon's third quarter AWS accelerates growth, AI e-commerce brings revenue increment

According to the Zhitong Finance APP, Everbright Securities released a research report stating that after the market close on October 30, Eastern Time, Amazon (AMZN.US) announced its Q3 2025 earnings. As of 8:00 AM Beijing time on October 31, Amazon's after-hours stock price rose by 13.16%. Considering the alleviation of data center capacity constraints, AWS revenue exceeded expectations and accelerated growth, while internal circulation advertising and AI shopping assistants contributed to performance increments, the revenue forecast for 2025-2027 has been raised to $701 billion / $777 billion / $861 billion (compared to the previous forecast +1.0% / +1.4% / +0.5%). Given the solid foundation of the e-commerce business and the scale effects of previous delivery network construction are becoming apparent, driving profit release, the net profit forecast for 2025-2027 has been raised to $67 billion / $83 billion / $101 billion (compared to the previous forecast +1.3% / +1.1% / +0.7%). The current price corresponds to a PE of 35x / 28x / 23x, maintaining a "Buy" rating.

Everbright Securities' main points are as follows:

Event: After the market close on October 30, Eastern Time, Amazon announced its Q3 2025 earnings. As of 8:00 AM Beijing time on October 31, Amazon's after-hours stock price rose by 13.16%.

Q3 2025 revenue exceeded expectations, Q4 2025 operating profit guidance slightly below expectations. In Q3 2025, Amazon's net sales were $180.17 billion, a year-on-year increase of 13.4% (previous value 13.3%), exceeding Bloomberg consensus expectations (hereinafter referred to as consensus expectations) by 1.32%; operating profit was $17.42 billion, 11.7% lower than consensus expectations, mainly affected by one-time expenses; operating profit margin was 9.7%, a year-on-year decrease of 1.3 percentage points; net profit was $21.18 billion, EPS $1.95, exceeding consensus expectations by 25.3%. Q4 2025 net sales guidance is $206 billion - $213 billion (median slightly higher than consensus expectations by 0.3%), year-on-year growth of 9.7% - 13.4%; operating profit guidance is $15.5 billion - $20.5 billion (median slightly lower than consensus expectations by 1.7%), year-on-year growth rate of -1% - 22.6%.

Q3 2025 AWS revenue accelerated growth, operating profit margin rebounded quarter-on-quarter. In Q3 2025, Amazon's AWS revenue was $33 billion, a year-on-year increase of 20.2% (Q2 2025 year-on-year growth rate 17.5%), AWS operating profit margin was 34.6%, an increase of 1.7 percentage points quarter-on-quarter, a year-on-year decrease of 3.4 percentage points. According to the Q3 2025 conference call, current self-developed chip Trainium2 orders are in short supply, with revenue reaching billions of dollars, a quarter-on-quarter increase of 150%. It is expected that Tranium3's service targets will shift from large customers to small and medium-sized customers, opening up market space.

Q3 2025 e-commerce department operating profit margin declined quarter-on-quarter. Excluding AWS, in other businesses, North America had an operating profit of $4.79 billion, with an operating profit margin of 3.3%; international operating profit was $1.2 billion, with an operating profit margin of 2.9%. The operating profit margins in North America and internationally declined year-on-year and quarter-on-quarter, mainly affected by one-time legal settlements and job cut expenses. According to the Q3 2025 conference call, the AI shopping assistant Rufus has reached 250 million annual active users, with monthly user numbers increasing by 140% year-on-year, and is expected to achieve over $10 billion in annual sales in the future Capital expenditures continue to grow, capacity constraints have eased somewhat, and the current capacity bottleneck remains in electricity. In Q3 2025, Amazon's capital expenditures (TTM) reached $115.9 billion, a year-on-year increase of 77.1%, with cash capital expenditures of $34.2 billion. According to the Q3 2025 conference call, cash capital expenditures for the entire year of 2025 are expected to reach $125 billion, a year-on-year increase of 60%, and will continue to increase in 2026, with overall capacity expected to double by the end of 2027. Management believes that the current capacity bottleneck still lies in electricity, which may shift to chips in the future.

Earnings Forecast, Valuation, and Rating: Considering the easing of data center capacity constraints, AWS revenue has exceeded expectations and is accelerating growth, while internal circulation advertising and AI shopping assistants are contributing to performance increments. The revenue forecast for 2025-2027 has been raised to $701 billion / $777 billion / $861 billion (compared to the previous forecast +1.0% / +1.4% / +0.5%). Given the solid foundation of the e-commerce business and the scale effects of the earlier delivery network construction are becoming apparent, driving profit release, the net profit forecast for 2025-2027 has been raised to $67 billion / $83.1 billion / $101.7 billion (compared to the previous forecast +1.3% / +1.1% / +0.7%). The current price corresponds to a PE of 35x / 28x / 23x, maintaining a "Buy" rating.

Risk Warning: Macroeconomic performance may be below expectations, uncertainty in tariff policies, and AI commercialization progress may be slower than expected