For the second quarter of 2025, Amazon reported earnings per share of $1.68, which is higher than the expected $1.33. Their net sales reached $167.70 billion, exceeding the anticipated $162.15 billion. Amazon Web Services (AWS) also did well, earning $30.87 billion in net sales, slightly more than the projected $30.77 billion. Looking ahead to the third quarter of 2025, Amazon expects net sales to fall between $174.0 billion and $179.5 billion, higher than the analyst estimate of $173.24 billion.

Operating Income Outlook

For the same period, Amazon’s operating income outlook ranges from $15.5 billion to $20.5 billion, with a predicted figure of $19.42 billion. Previously, both Amazon and Apple announced their earnings after the market closed. Today’s earnings report on July 31, 2025, shows a big lead in both profit and sales, signaling a bullish trend. The guidance for the third quarter is strong, with even the low end of the sales forecast exceeding analyst predictions. This indicates that the company is stronger than the market had previously believed. Implied volatility in Amazon options has likely dropped following these results. Before the market closed, the front-month implied volatility was over 50%, but it has likely decreased to around 30%. This sharp drop, known as “volatility crush,” makes options more affordable now than they were the day before. We believe the stock is set for an upward trend in the coming weeks. A similar situation occurred after the Q4 2023 earnings report, which resulted in a 15% rally in the following month. The current situation, with strong guidance, resembles those favorable conditions.

Consumer Spending and Retail Sales

This positive outlook is backed by June 2025 government data showing that consumer spending remains strong. This overall trend supports the impressive retail sales numbers Amazon just reported. The healthy state of consumer spending is a boost for Amazon’s main business. While AWS sales improved only slightly, the stronger performance in the retail and advertising divisions is the key takeaway. This shows that Amazon’s profit sources are diversifying beyond cloud computing, making the company more resilient. Consequently, we are considering bullish strategies that take advantage of the lower volatility. Buying call options or implementing bull call spreads with September 2025 expirations can help us capture the expected upward movement. These trades allow us to benefit from the strong guidance while taking advantage of the newly lower option premiums. Create your live VT Markets account and start trading now.

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