Amazon on Thursday reported a 9 percent increase in first-quarter revenue, but its outlook for the current quarter fell short of analyst expectations, raising investor concerns over the potential impact of escalating U.S.-China trade tensions.

The tech and retail giant said revenue reached $155.7 billion from January to March. Despite the gain, shares dropped as much as 4 percent in after-hours trading on Wall Street.

Amazon Web Services, the company’s cloud computing arm, saw a 17 percent rise in sales to $29.3 billion, slightly below forecasts.

"We're pleased with the start to 2025, especially our pace of innovation and progress in continuing to improve customer experiences," CEO Andy Jassy said, highlighting new AI offerings, including the next-generation Alexa+ virtual assistant.

During the quarter, Amazon launched multiple artificial intelligence initiatives, including its Amazon Nova generative AI models. The company also expanded its Project Kuiper satellite network in a bid to challenge Elon Musk’s Starlink.

Amazon projected second-quarter net sales between $159 billion and $164 billion, marking growth of 7 percent to 11 percent. However, the guidance came in below analyst expectations.

The weaker outlook comes amid investor anxiety over new tariffs imposed by former President Donald Trump, who has returned to office and announced sweeping levies on Chinese imports. Trump has introduced tariffs of up to 145 percent on goods from China, though some categories, including electronics, have been temporarily exempted.

There is uncertainty over how the tariffs could impact consumer spending, especially after data showed a contraction in the U.S. economy in the first quarter.

Jassy said Amazon had not yet seen a decline in demand following the tariff announcement.

"To some extent, we've seen some heightened buying in certain categories" as customers anticipate price increases, he said. Still, "most sellers (on Amazon) just haven't changed pricing yet," he added, noting that Amazon was not heavily reliant on China.

Earlier in the week, a report that Amazon might display tariff-related price increases on its platform drew a strong response from the White House. Amazon executive chairman Jeff Bezos reportedly called Trump to deescalate the situation, and the company said it had no plans to implement such a measure.

Advertising remained a strong performer for Amazon, with sales rising 19 percent year-on-year, despite heavy competition from Google and Meta.