The latest quarter from the toll booth of eCommerce is in the books. Similar to the prior quarter, profitability remains on an upward trajectory. Amazon did not “buy” this quarter with markdowns keeping inventories at elevated levels. A few takeaways:

Online sales exceeded expectations, rising 11%—the fastest growth rate in years. However, inventory levels increased 19% this quarter and 15% last quarter, outpacing sales growth. This imbalance suggests elevated pricing and increased vendor funding, particularly as Amazon posted its highest operating margin in years.
AWS grew 17%, falling short of consensus estimates. Once a consistent outperformer, AWS is now raising concerns among Wall Street analysts.
Third-Party Seller Services returned to double-digit growth. Since Amazon collects a referral fee from sellers, this also points to higher pricing dynamics. Advertising revenue surged 23%—its fastest growth since Q1 2024—adding to the momentum.
Bottom Line: While AWS may disappoint investors, the broader narrative is that Amazon is clearly leveraging price increases and vendor support to drive profitability—even as it manages elevated inventory levels.