Amazon CEO Explains Reasons for Layoffs; Company's 2025 Capital Expenditure Reaches $125 Billion

On October 30 local time, Amazon released its third-quarter earnings report for fiscal year 2025. Overall, revenue, profit, and the AWS cloud business segment all exceeded market expectations, causing its after-hours stock price to surge by over 13% at one point.

The financial report shows that Amazon's net sales for the quarter were $180.2 billion, a 13% year-over-year increase. Excluding the impact of foreign exchange rates, the growth rate was approximately 12%. Operating income was reported at $17.4 billion, flat compared to the same period last year. Excluding a $2.5 billion FTC settlement fee and an $1.8 billion severance expense, adjusted operating income was approximately $21.7 billion.

Furthermore, the company's net profit for the reporting period rose to $21.2 billion. Cash flow from operating activities over the past 12 months reached $130.7 billion, up 16% year-over-year; however, free cash flow decreased to approximately $14.8 billion. The data indicates that the significant decline in free cash flow is primarily due to a surge in capital expenditures. Free cash flow over the past 12 months was only $14.8 billion, suggesting that despite growth in revenue and profit, capital return efficiency might be being impacted by capital-intensive investments.

In terms of business segments, AWS revenue grew by 20.2% year-over-year. Amazon CEO Andy Jassy stated in the earnings call, "AWS is growing at a pace we haven't seen since 2022." He emphasized that this benefits from a broad recovery in AI demand and an accelerated adoption of its self-developed Trainium chips by enterprise customers.

Although AWS's growth rate rebounded to over 20% this quarter, its base is already extremely high. It faces significant capital investment, intense competition, and pressure on profit margins. Earlier analysis pointed out that AWS's profit margin is declining, and its growth lags behind competitors like Microsoft Azure and Google Cloud.

The high-profile layoffs at Amazon this quarter have drawn widespread global attention. Shortly before, Beth Galetti, Amazon's Senior Vice President of People eXperience and Technology (PXT), announced in a public letter that the company plans to cut approximately 14,000 positions. According to a Business Insider report, over 78% of the eliminated roles were mid-to-junior management levels within the retail department, and over 80% involved traditional business lines such as retail, e-commerce, human resources, and logistics.