Amazon Q2 Earnings Beat Estimates, Shares Dip: ETFs in Focus
The guidance spooked investors who are eager to see Amazon's hefty investments in artificial intelligence pay off, pushing shares of AMZN down more than 8% in pre-market trading.
This has put ETFs with a substantial allocation to this online behemoth in focus. These include Global X PureCap MSCI Consumer Discretionary ETF GXPD, Fidelity MSCI Consumer Discretionary Index ETF FDIS, ProShares Online Retail ETF ONLN, Vanguard Consumer Discretionary ETF VCR and Consumer Discretionary Select Sector SPDR Fund XLY.
The e-commerce giant reported earnings per share of $1.68, outpacing the Zacks Consensus Estimate of $1.33 and the year-ago earnings of $1.23. Revenues grew 13% year over year to $167.7 billion and edged past the consensus estimate of $162.3 billion.
Amazon's advertising business was its fastest-growing division in the quarter. Ad revenues increased 23% year over year to $15.69 billion. Online store sales grew 11% to $61.48 billion, while Amazon's cloud computing business — Amazon Web Services ('AWS') — revenues soared 17.5% year over year to $30.9 billion (read: 5 ETFs to Profit From Amazon's Longest-Ever Prime Day Event).
Like other tech companies, Amazon has ramped up investments in data centers, chips and the power needed for AI workloads. The online giant has committed to spending up to $100 billion this year on AI as it races to build out data centers and software. It is also investing in its own computer chips and those developed by NVIDIA NVDA.
The world's largest online retailer expects revenues in the range of $174-$179.5 billion for the third quarter of 2025. The Zacks Consensus Estimate is pegged at $173.13 billion. Amazon expects operating income of $15.5-$20.5 billion in the third quarter, below analysts' expectations.
ETFs to Buy
Global X PureCap MSCI Consumer Discretionary ETF (GXPD)
Global X PureCap MSCI Consumer Discretionary ETF seeks to provide uncapped, market capitalization exposure to the Consumer Discretionary sector by tracking the MSCI USA Consumer Discretionary Index. It holds 50 stocks in its basket with Amazon occupying the top position at 38.3% of the assets. Global X PureCap MSCI Consumer Discretionary ETF has accumulated $0.5 million in its asset base since its debut last week and charges 0.15%.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS)
Fidelity MSCI Consumer Discretionary Index ETF tracks the MSCI USA IMI Consumer Discretionary Index, holding 259 stocks in its basket. Of these, Amazon takes the top spot with a 24.2% share. Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.8 billion in its asset base while trading in a good volume of around 86,000 shares a day on average. It charges 8 bps in annual fees from investors and currently has a Zacks ETF Rank #5 (Strong Sell) with a Medium risk outlook.
ProShares Online Retail ETF (ONLN)
ProShares Online Retail ETF offers exposure to companies that principally sell online or through other non-store channels and then zeroes in on the companies that reshape the retail space. It tracks the ProShares Online Retail Index, holding 19 stocks in its basket. Amazon is the top firm, accounting for 24% of the portfolio. ProShares Online Retail ETF has amassed $79 million in its asset base and currently trades in a moderate volume of around 8,000 shares a day on average. It charges 58 bps in annual fees from investors.
Vanguard Consumer Discretionary ETF (VCR)
Vanguard Consumer Discretionary ETF currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index and holds 296 stocks in its basket. Of these, Amazon occupies the top position, with a 23.9% allocation. Broadline Retail takes the largest share at 27%, while automobile manufacturers, restaurants and hotels, and resorts & cruise lines round off the next three spots. VCR charges investors 9 bps in annual fees, while volume is moderate at nearly 42,000 shares a day. The product has managed about $6.2 billion in its asset base and currently carries a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: ETFs to Consider as Consumer Sentiment Improves in July).
Consumer Discretionary Select Sector SPDR Fund (XLY)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. It is the largest and most popular product in this space, with AUM of nearly $22.5 billion and an average daily volume of around 5.1 million shares. Holding 51 securities in its basket, Amazon takes the top spot with 24.4% of the assets. Hotels, restaurants & leisure, broadline retail, specialty retail and automobiles are the top four sectors with double-digit exposure each. Consumer Discretionary Select Sector SPDR Fund charges 8 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.
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