The third quarter produced sales and earnings for Amazon well ahead of Wall Street expectations, assisted by a significant increase in product retail revenue.
Net income advanced to $21.19 billion, or $1.95 per diluted share, compared with $15.33 billion, or $1.43 per diluted share, in third quarter 2024.
Zacks Investment Research anticipated Amazon earning $1.58 per diluted share in the quarter with sales reaching $177.88 billion.
In fact, Amazon net sales increased to $180.17 billion from $158.88 billion in the year-earlier quarter, the company noted, up 13%. With an approximately $1.5 billion favorable impact from year-over-year changes in foreign exchange rates excluded, net sales would have increased 12% in the period year over year. Product sales grew to $74.06 billion from $67.6 billion, while service sales grew to $106.11 billion from $91.28 billion year over year, Amazon reported.
Operating income was $17.42 billion versus $17.41 billion in year-prior quarter. Third-quarter 2025 operating income includes two special charges: approximately $2.5 billion related to a legal settlement with the United States Federal Trade Commission and $1.8 billion in estimated severance costs primarily related to planned role eliminations the company recently announced. Without the two special charges, operating income would have come in at about $21.7 billion.
North America segment sales increased 11% in the quarter year-over-year to $106.27 billion. Operating income was $4.79 billion versus $5.66 billion in third quarter 2024, with the approximately $2.5 billion charge related to a legal settlement with the FTC excluded, North America operating income would have been $7.3 billion. The results also include estimated severance costs primarily related to the layoffs.
Andy Jassy, Amazon president and CEO, said in a conference call Amazon continues to push its AI initiatives across the platform and on the retail and services ends of the business. At the same time, the company is sticking to its long-standing approach to its retail operation.
“The team continues to deliver and innovate for customers across our key priorities, selection, low prices and convenience, particularly fast delivery,” Jassy said. “We’re offering 14% more selection since last quarter from popular brands. And w’ve added hundreds of thousands of items from popular brands this year.”
Everyday essentials sales has been growing at a pace faster than the rest of the retail business, Jassy pointed out.
In application of AI, Jassy said, adoption of the company’s Rufus shopping assistant has gained rapidly.
“Rufus, our AI powered shopping assistant, has had 250 million active customers this year with monthly users up 140% year over year, interactions up 210% year over year and customers using Rufus during a shopping trip being 60% more likely to complete a purchase,” Jassy said. “Rufus is on track to deliver over $10 billion in incremental annualized sales.”
Jassy added Amazon is committed “to staying sharp on price and meeting or beating prices of other major retailers. In July, we had our biggest Prime Day event ever with customers saving billions of dollars across 35 categories.”
In announcing the third quarter financial results, Jassy said, “We continue to see strong momentum and growth across Amazon as AI drives meaningful improvements in every corner of our business. AWS is growing at a pace we haven’t seen since 2022, re-accelerating to 20.2% year over year. We continue to see strong demand in AI and core infrastructure, and we’ve been focused on accelerating capacity, adding more than 3.8 gigawatts in the past 12 months. In stores, we continue to realize the benefits of innovating in our fulfillment network, and we’re on track to deliver to Prime members at the fastest speeds ever again this year, expand same-day delivery of perishable groceries to over 2,300 communities by end of year, and double the number of rural communities with access to Amazon’s same-day and next-day delivery.”
