Amazon.com (AMZN) provided investors with several positives Thursday night, when it reported better-than-expected Q1 earnings, RBC Capital Markets said in a new research note.

Clearly, unknowable tariff-related hurdles remain, RBC said, noting that the company conceded significant uncertainty surrounding that exposure.

Its Amazon Web Services unit did not meet expectations, yet it finished the quarter with a strong backlog and enough capacity coming online by the second half of 2025 to fuel its acceleration, RBC said.

AWS' backlog increased 20% over year-ago levels, rising to $189 billion, with Amazon's investment in advancing custom silicon expected to supply "superior" price performance, the analysts said.

The company also is working on as many as 1,000 artificial intelligence applications across several sectors, the analysts said. These include robotics, shopping and its fulfillment network and its Prime Video and Alexa+, the next generation of its digital assistants. The bulk of Amazon's capex spending in the first three months of 2025 was building out AWS backlog to support growing demand for AI services, RBC said.

Amazon is expecting Q2 revenue in a range of $159 billion to $164 billion vs. the consensus view looking for $161.2 billion. The company also is projecting earnings before interest and taxes of $13 billion to $17.5 billion, lagging the analyst consensus of $17.62 billion by 13.5% at its mid-point, while Amazon expecting currency exchange to trim Q2 revenue by around 10 basis points, RBC said.

The RBC analysts revised their revenue and EBIT forecast slightly to reflect Amazon's new outlook, now expecting around $161.91 billion in revenue during the current quarter compared with $161.34 billion previously.

RBC also trimmed its price target for Amazon shares to $230 from $235 a share previously and reiterated the analysts' outperform stock rating.

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