Amazon and Apple Earnings: Positive Growth, Cautious Outlook

Amazon and Apple both reported better-than-expected earnings, energizing investor confidence. However, their conservative guidance raises concerns, especially compared to peers like Meta and Microsoft, leading to mixed sentiment in the markets.

Date: 06-05-2025

AI Rating: 6

**Earnings Performance Overview**
Amazon's Q1 results exceeded expectations with sales of $155.66 billion, surpassing estimates of $154.56 billion by 0.71%. Its Earnings Per Share (EPS) of $1.59 also outperformed the $1.35 forecast, marking a substantial 40% increase over last year's EPS of $1.13. Similarly, Apple reported Q2 sales of $95.35 billion, exceeding expectations of $94.26 billion by 1.15%. Its Q2 EPS of $1.65 was up 8% year-over-year and beat the $1.61 estimate by 2%. Both companies have demonstrated steady top and bottom-line performance over the past quarters, with Apple hitting a nine-quarter streak of exceeding expectations and Amazon achieving this feat for the last ten quarters.

**Guidance and Market Sentiment**
Amazon expects Q2 sales between $159-$164 billion, trailing analyst expectations of $161.62 billion. The company cautioned that its Q2 operating income guidance of $13-$17.5 billion fell short of the anticipated $17.8 billion. Furthermore, Apple's target of low to mid-single-digit growth in Q3 sales, alongside tariff-related costs and tight gross margins, may dampen investor sentiment. Despite their solid earnings, both companies face a challenging external environment, leading to caution among analysts.

**Revisions and Future Growth Projections**
The report highlighted a noteworthy trend: over the past month, analysts have lowered their earnings estimates for both Amazon and Apple for fiscal 2025 and 2026. This decline in projections could pose risks to investor confidence, as reduced expectations historically correlate with market corrections. Both Amazon and Apple currently possess a Zacks Rank #3 (Hold), indicating a balanced outlook; however, continued downward revisions in EPS could shift the sentiment toward a sell rating.

In conclusion, while both Amazon and Apple have shown resilience in their quarterly results, the underwhelming guidance and decreasing EPS estimates reflect cautious investor sentiment. With both stocks experiencing price drops year-to-date (14% for Amazon and 20% for Apple), the market may perceive further opportunities for better buying positions but the potential for volatility remains high depending on forthcoming revisions and economic conditions.

Stocks: AMZN AAPL