We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Amazon's Ad Business Hits Milestone: Is it the Next Revenue Pillar?
Read MoreHide Full Article
Key Takeaways
Amazon's ad revenues reached $15.69B in Q2 2025, 9.36% of total revenues, up 23% y/y.
AI optimization, retail media and CTV expansion are boosting Amazons advertising growth.
Prime Video ads and a Roku deal expand Amazon's premium and connected TV ad reach.
Amazon’s (AMZN - Free Report) advertising business hit a milestone in the second quarter of 2025, capturing 9.36% of the company’s total revenues — the highest share ever recorded — and rose 23% year over year to $15.69 billion, representing 9.36% of total revenues. This momentum reflects the impact of AI-powered optimization, a growing share of the digital advertising market, and AMZN’s ability to harness its vast retail media presence, proprietary shopping data, and expanding connected TV (CTV) footprint. The global rollout of Prime Video ads adds a high-value, premium channel that could further lift revenues.
Digital advertising fuels Amazon’s top line in two ways. It directly generates revenues from brands paying for sponsored placements, display and video ads, while also boosting product visibility and retail transactions, which in turn drive sales and third-party seller fees. Monetizing Prime Video’s audience creates an additional high-CPM revenue stream less dependent on seasonal shopping trends.
Amazon’s ad ecosystem reaches over 300 million ad-supported users in the United States alone, spanning retail, Prime Video, Twitch and Fire TV. Live sports like the NFL, NASCAR, and NBA deepen engagement, while the landmark Roku partnership grants advertisers exclusive access to 80 million CTV households — the largest authenticated footprint in the United States — via Amazon DSP.
The Amazon DSP remains a growth engine, powered by trillions of proprietary browsing, shopping and streaming signals. Combined with strong supply-side relationships and privacy-safe clean rooms, it delivers measurable, high-impact results. With third-quarter total revenues projected at $174-$179.5 billion, Amazon signals confidence in sustaining and potentially accelerating its ad-driven growth trajectory.
Amazon Faces Stiff Competition in Digital Advertising
Alphabet Inc. (GOOGL - Free Report) commands advertising dominance through Google Search and YouTube, leveraging its massive user base, strong brand equity and advanced AI to optimize targeting and monetization. In the second quarter of 2025, Alphabet’s ad revenues rose 10.4% year over year to $71.34 billion. Alphabet’s market leadership is reinforced by innovations like the Mobile Friendly algorithm update, product listings, flight search, Google Now and AI integration, alongside its growing cloud presence, driving sustained growth in digital advertising.
Meta Platforms (META - Free Report) excels in advertising through precise targeting across Facebook, Instagram, WhatsApp, Messenger and Threads, leveraging demographic, behavioral and psychographic data to boost engagement. In the second quarter of 2025, META’s ad revenues rose 21.1% to $46.6 billion, with full-year growth projected at 12.5%. META’s integration of AI enhances personalization and campaign performance, though privacy regulations and transparency concerns remain significant challenges in its rivalry with Amazon.
AMZN shares have gained 2.2% in the year-to-date period, underperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector’s growth of 8.3% and 7.1%, respectively.
AMZN’s YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, AMZN stock is currently trading at a forward 12-month Price/Sales ratio of 3.15X compared with the industry’s 2.27X. AMZN has a Value Score of C.
AMZN’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AMZN’s 2025 earnings is pegged at $6.70 per share, up by 5.8% over the past 30 days. This indicates a 21.16% increase from the figure reported in the year-ago quarter.
Image: Bigstock
Amazon's Ad Business Hits Milestone: Is it the Next Revenue Pillar?
Key Takeaways
Amazon’s (AMZN - Free Report) advertising business hit a milestone in the second quarter of 2025, capturing 9.36% of the company’s total revenues — the highest share ever recorded — and rose 23% year over year to $15.69 billion, representing 9.36% of total revenues. This momentum reflects the impact of AI-powered optimization, a growing share of the digital advertising market, and AMZN’s ability to harness its vast retail media presence, proprietary shopping data, and expanding connected TV (CTV) footprint. The global rollout of Prime Video ads adds a high-value, premium channel that could further lift revenues.
Digital advertising fuels Amazon’s top line in two ways. It directly generates revenues from brands paying for sponsored placements, display and video ads, while also boosting product visibility and retail transactions, which in turn drive sales and third-party seller fees. Monetizing Prime Video’s audience creates an additional high-CPM revenue stream less dependent on seasonal shopping trends.
Amazon’s ad ecosystem reaches over 300 million ad-supported users in the United States alone, spanning retail, Prime Video, Twitch and Fire TV. Live sports like the NFL, NASCAR, and NBA deepen engagement, while the landmark Roku partnership grants advertisers exclusive access to 80 million CTV households — the largest authenticated footprint in the United States — via Amazon DSP.
The Amazon DSP remains a growth engine, powered by trillions of proprietary browsing, shopping and streaming signals. Combined with strong supply-side relationships and privacy-safe clean rooms, it delivers measurable, high-impact results. With third-quarter total revenues projected at $174-$179.5 billion, Amazon signals confidence in sustaining and potentially accelerating its ad-driven growth trajectory.
Amazon Faces Stiff Competition in Digital Advertising
Alphabet Inc. (GOOGL - Free Report) commands advertising dominance through Google Search and YouTube, leveraging its massive user base, strong brand equity and advanced AI to optimize targeting and monetization. In the second quarter of 2025, Alphabet’s ad revenues rose 10.4% year over year to $71.34 billion. Alphabet’s market leadership is reinforced by innovations like the Mobile Friendly algorithm update, product listings, flight search, Google Now and AI integration, alongside its growing cloud presence, driving sustained growth in digital advertising.
Meta Platforms (META - Free Report) excels in advertising through precise targeting across Facebook, Instagram, WhatsApp, Messenger and Threads, leveraging demographic, behavioral and psychographic data to boost engagement. In the second quarter of 2025, META’s ad revenues rose 21.1% to $46.6 billion, with full-year growth projected at 12.5%. META’s integration of AI enhances personalization and campaign performance, though privacy regulations and transparency concerns remain significant challenges in its rivalry with Amazon.
AMZN’s Share Price Performance, Valuation & Estimates
AMZN shares have gained 2.2% in the year-to-date period, underperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector’s growth of 8.3% and 7.1%, respectively.
AMZN’s YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, AMZN stock is currently trading at a forward 12-month Price/Sales ratio of 3.15X compared with the industry’s 2.27X. AMZN has a Value Score of C.
AMZN’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AMZN’s 2025 earnings is pegged at $6.70 per share, up by 5.8% over the past 30 days. This indicates a 21.16% increase from the figure reported in the year-ago quarter.
Image Source: Zacks Investment Research
Amazon stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.