For the second quarter of 2025, Amazon reported earnings per share of $1.68, exceeding the expected $1.33. Net sales reached $167.70 billion, surpassing the anticipated $162.15 billion.
Amazon Web Services (AWS) achieved net sales of $30.87 billion, slightly more than the estimated $30.77 billion. For the third quarter of 2025, Amazon projects net sales between $174.0 billion and $179.5 billion, above the expectation of $173.24 billion.
Operating Income Outlook
The company’s operating income outlook for the same period ranges from $15.5 billion to $20.5 billion, with predictions set at $19.42 billion. Previously, both Amazon and Apple announced their earnings after market closure.
Given today’s earnings report on July 31, 2025, the significant beat on both profit and sales creates a clear bullish signal. The forward guidance for the third quarter is also robust, with the low end of the sales forecast already surpassing analyst estimates. This suggests underlying strength in the business that the market had underestimated.
Implied volatility in Amazon options has likely collapsed following the release of these certain results. We saw front-month implied volatility sitting above 50% just before the close, and it has now likely dropped closer to the 30% range. This sharp decrease, known as “volatility crush,” makes it significantly cheaper to purchase options now than it was yesterday.
We believe the stock is positioned for a positive drift upwards in the coming weeks. We saw a similar dynamic after the Q4 2023 earnings report, where a strong beat led to an extended rally of over 15% in the following month. The current setup, with strong guidance, mirrors the conditions of that past rally.
Consumer Spending and Retail Sales
This optimistic outlook is supported by recent June 2025 government data showing that consumer spending has remained strong. This macro trend reinforces the impressive retail sales numbers Amazon just delivered. It appears the consumer is still healthy, providing a tailwind for the company’s largest segment.
While the AWS sales were only a slight beat, the outperformance in the retail and advertising divisions is the main story here. This indicates that the company’s profit drivers are becoming more diversified beyond just cloud computing. This diversification makes the company more resilient.
Therefore, we are looking at bullish derivative strategies that take advantage of the lower volatility. Buying call options or implementing bull call spreads with September 2025 expirations could capture the expected upward momentum. These trades allow us to participate in the upside from the strong guidance while benefiting from the newly cheaper option premiums.
