Despite the challenging economic situation, inflation, high labor costs, and customer behavior shifts nationwide, Amazon  (AMZN)  keeps posting strong earnings. This suggests that the retailer knows how to retain its existing customers and attract new ones.

The e-commerce giant posted second-quarter financial results revealing overall sales of $167.7 billion, beating analysts’ estimates by an impressive $5.60 billion. However, Amazon Web Services (AWS) sales were a bit disappointing compared to the competition.

AWS sales improved 17.5% to $30.9 billion, while Microsoft Azure had a 39% increase, and Google Cloud grew 32%, “reinforcing fears that AWS may be losing ground in the AI cloud race,” writes The Street’s Moz Farooque.

While investors were shaken by Amazon’s outlook suggesting operating income in the range of $15.5 billion to $20.5 billion, compared to Wall Street’s estimate of $19.41 billion, Amazon shared its big plans for AI.

CEO Andy Jassy highlighted during the earnings call that AI technology “is the biggest technology transformation of our lifetime” and that it will “enable customer experiences we really only dreamed about before.”

Jassy also shared interesting updates for Alexa+.

Amazon’s CEO hints the company is exploring advertisement in Alexa+ “to help people find discovery and also as a lever to drive revenue.”

Image source: Noah Berger/Getty Images for Amazon Web Services

As Alexa+ reaches millions, Amazon considers ads to drive revenue

In February 2025, Amazon officially introduced Alexa+, its next-generation AI-powered assistant.

Per the official press release, Alexa+ can:

• Engage in conversation;
• Entertain;
• Teach;
• Helps with organization;
• Summarize complex topics;
• Protect home;
• Make reservations;
• Search, find, or buy products online.

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Amazon recently expanded Alexa+ to millions of customers; however, it is not yet publicly available. Instead of rolling it out widely, Amazon sent invites to customers who originally signed up to test the service when it became available.

During Early Access, Alexa+ is available for free with an Echo Show 8, 15, or 21. Later, it will be free for Prime customers, while non-Prime users will have to pay $19.99 per month after its public launch.

Will that bring enough profit to return Amazon’s investment in this technology?

Last year, Wall Street reported that “between 2017 and 2021, Amazon had more than $25 billion in losses from its devices business.” While the figures for the years before and after are unavailable, it’s hard to assume they are much better.

During the Q2 earnings call, Jassy hinted that the company is considering adding ads to the upgraded virtual assistant.

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“I think that over time, there will be opportunities, as people are engaging more multi-turn conversations to have advertising play a role to help people find discovery and also as a lever to drive revenue.”

Jassy added that there could also be a room for “a subscription element beyond what there is today.”

Ads on Alexa+ might be a two-edged sword for Amazon

Amazon’s second quarter advertising revenue grew 22% year over year, driven by sponsored products. The company stated that advertising “remains an important contributor to profitability in the North American international segments.”

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While advertising is a strong contributor to Amazon’s profits, including it in Amazon+ service can turn out to be a risky move in terms of customer satisfaction.

According to a survey conducted by user-first media platform Picnic, in partnership with YouGov, 70% of people find digital advertising annoying and unpleasant.

More key findings from Ad Experience survey:

• 66% agree that too many ads reduce brand trust;
• 72% agree it negatively affects brand perception;
• 71% agree it makes them less likely to purchase from the brand.

When the news of Amazon possibly introducing ads to Alexa+ reached Reddit, some consumers expressed frustratation with the idea.

“That is an incredible insult to the consumer. I’ll drop every single device I have, and that’s one in each room. And likely reduce or eliminate purchasing from Amazon,” one customer wrote.

Another consumer commented, “All the more reason to quit using Alexa, or even just quit Amazon altogether!”

Currently, ads are only appearing in Alexa restrictively. There’s an occasional visual ad on the Echo Show or a prerecorded ad in between songs on one of Alexa’s smart speakers.

Moreover, Alexa+ reviews are mixed, suggesting there’s much more to be done to improve the service. Some customers argue that while the new features including multiple requests are good, Alexa+ is unable to control as many tasks as expected.

It appears that the major upgrade from previous Alexa was making Alexa+ more conversational, which is not something every customer is interested in. There are also many complaints about voice options.

Additionally, Alexa+ is not immune to hallucinations, so there’s a lot of work to be done before implementing ads into the service, points out TechCrunch.

While ads have not been confirmed for sure, it is most likely that they will become part of the Alexa+ experience at one point. Even Amazon’s major AI competitors, such as Google and OpenAI’s ChatGPT, are exploring the possibility and are open to “tasteful” advertising.

When it happens, it would be interesting to see how much Amazon would profit from it, and how many customers it would drive away. 

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