Amazon's cloud computing division, Amazon Web Services (AWS), has reported its most significant quarterly growth in almost three years, driven by a powerful surge in demand for artificial intelligence technologies. The strong performance pushed Amazon's overall revenue and net income well past analyst expectations, causing its shares to jump over 11% in after-hours trading.
For the third quarter ending in September, the company announced total revenues of $180.2 billion, a 13% increase from the same period last year. Net income saw an even more substantial rise, growing nearly 40% to $21.2 billion, signaling robust health across its business segments.
Key Takeaways
- Amazon Web Services (AWS) sales grew 20% to $33 billion, beating estimates of $32.4 billion.
- Overall Q3 revenue reached $180.2 billion, a 13% year-over-year increase.
- Net income climbed almost 40% to $21.2 billion.
- Company shares rose more than 11% in after-hours trading following the announcement.
- CEO Andy Jassy attributed the growth to AI driving improvements across the business.
AWS Powers Ahead with Record Growth
The standout performer in Amazon's latest earnings report was its cloud unit, AWS. The division, which provides server space and computing power to businesses worldwide, posted a 20% surge in sales, reaching $33 billion for the quarter. This figure not only surpassed Wall Street's consensus estimate of $32.4 billion but also marked the fastest growth rate for the unit since 2022.
This performance has helped reassure investors who were concerned that AWS might be losing its competitive edge to rivals like Microsoft and Oracle. The results indicate that Amazon's core profit engine remains incredibly strong and is successfully capitalizing on the global AI boom.
Chief Executive and President Andy Jassy directly linked the success to the company's focus on artificial intelligence. He noted that AI is creating "meaningful improvements in every corner of our business."
"AWS is growing at a pace we haven’t seen since 2022," Jassy said. "We continue to see strong demand in AI and core infrastructure, and we’ve been focused on accelerating capacity."
By the Numbers: Amazon's Q3 Performance
- Total Revenue: $180.2 billion (up 13%)
- Net Income: $21.2 billion (up nearly 40%)
- AWS Sales: $33 billion (up 20%)
- Stock Performance: Jumped over 11% post-announcement
Investing Heavily in AI Infrastructure
To meet the soaring demand, Amazon has been aggressively expanding its physical infrastructure. The company confirmed it has been enlarging its data center footprint to boost its overall computing capacity.
Over the past 12 months, Amazon has added more than 3.8 gigawatts of computing power to its global network. This expansion is part of a much larger strategy outlined by Jassy earlier in the year. In February, he informed investors that Amazon's total capital expenditure for the year would be approximately $100 billion, with a significant portion dedicated to building out its AI and cloud capabilities.
This investment appears to be a primary driver of the current growth, positioning AWS to handle the intensive computing needs of modern AI applications, from machine learning models to generative AI services.
Balancing Expansion with Cost-Cutting
While Amazon is spending heavily on AI infrastructure, it is also implementing cost-reduction measures elsewhere. Just this week, the company announced plans to cut 14,000 jobs from its corporate workforce. This move is part of a broader effort to streamline operations and reallocate resources toward high-growth areas like artificial intelligence.
Navigating Challenges and Looking Ahead
The impressive earnings report arrived just ten days after AWS experienced a widespread service outage. The disruption temporarily took many customer websites and applications offline, highlighting the critical role AWS plays in the digital economy. However, the incident appears to have had little to no impact on investor confidence, as demonstrated by the strong market reaction to the earnings release.
Looking toward the final quarter of the year, Amazon provided an optimistic forecast. The company projects fourth-quarter revenues to be between $206 billion and $213 billion. This range represents a year-over-year growth rate of between 10% and 13%.
This guidance is in line with or slightly above what analysts had anticipated, with the consensus forecast for fourth-quarter sales sitting at around $208.5 billion. The positive outlook suggests that Amazon's leadership expects the momentum from the AI-driven cloud demand to continue through the holiday season and into the new year, solidifying its position as a dominant force in both e-commerce and cloud computing.