Amazon’s cloud revenue rose on the fastest clip in nearly three years, helping the corporate forecast quarterly sales above estimates and driving its shares up 14% in after-market trading.
The corporate projected increased capital spending next yr.
The web retailer benefited as businesses proceed to spend relentlessly on artificial intelligence software development. Massive cloud demand helps the tech company ease the pressure from softer growth at its e-commerce business, which is gearing up for the critical holiday season amid weakness in consumer confidence stemming from global trade uncertainty.
Amazon’s rally in prolonged trading lifted the corporate’s market value by about $330 billion. A stock rally of the identical size in Friday’s official trading session would make it Amazon’s biggest one-day percentage gain since 2015.
“AWS is growing at a pace we haven’t seen since 2022,” CEO Andy Jassy said in an announcement. “We proceed to see strong demand in AI and core infrastructure, and we’ve been focused on accelerating capability.”
Amazon Chief Financial Officer Brian Olsavsky said he expected full-year capital expenditures to be around $125 billion, and better next yr, without providing details. The corporate booked $89.9 billion in capital expenditures through the primary three quarters, largely on AI projects.
Cloud revenue jumps
Its cloud unit, Amazon Web Services, reported a 20% rise in revenue within the third quarter ending in September, compared with estimates of a 17.95% increase. Amazon shrugged off a tricky prior week when an prolonged outage at AWS felled a lot of the preferred web sites and consumer apps.
Amazon has been the worst-performing stock among the many “Magnificent 7” megacap tech corporations, due partially to a nagging fame as a laggard in AI development.
“The report confirms Amazon’s operations are firing on all cylinders after a yr of relative underperformance,” said Ethan Feller, stock strategist at Zacks Investment Research. He said despite the stock’s nearly flat growth this yr, “the corporate’s fundamentals never meaningfully weakened.”
Amazon projected total net sales of between $206 billion and $213 billion for the fourth quarter, while analysts on average were expecting revenue of $208.12 billion, based on data compiled by LSEG.
Normally subdued, Jassy adopted an exuberant tone on the decision with analysts.
“I take a look at the momentum we’ve got right away, and I consider that we are able to proceed to grow and click on like this for some time,” he said. “I feel there are multiple places where we are able to expect to proceed to grow,” he added, referring to promoting and retail sales.
The strong results from AWS, the world’s largest cloud provider, followed stellar cloud revenue growth reported on Wednesday by Microsoft’s Azure and Google Cloud, the No. 2 and No. 3 players within the industry, respectively.
Microsoft, Google parent Alphabet and Facebook owner Meta all announced plans for higher annual capital expenditures as they pour money into chips and data centers.
Big Tech continues AI spending
Jassy’s comments echoed those from rival CEOs, indicating Big Tech has no plans to pump the brakes on AI spending despite Wall Street expressing concern a couple of possible investment bubble. Corporations, including Amazon, are introducing AI into nearly every facet of their operations in hopes of reducing costs and boosting productivity.
On Wednesday, Federal Reserve Chair Jerome Powell said he didn’t consider the AI boom is a speculative bubble just like the dot-com era, when many corporations were “ideas fairly than businesses.” Today’s AI leaders “even have earnings,” he said. He added that AI investments – especially in data centers, chips, and infrastructure – were a serious source of economic growth. He did warn about AI’s impact on the labor market.
AWS typically accounts for a bit greater than 15% of Amazon’s total revenue, however the segment is a big profit engine, making up roughly 60% of the corporate’s total operating income. The unit reported revenue growth of 17.5% within the second quarter.
Promoting was one other shiny spot. Sales increased 24% from a yr earlier to $17.7 billion. The corporate has been placing greater emphasis on sponsored product listings and finding latest spaces for higher ad volume, corresponding to Echo Show screens and hi-tech grocery shopping carts.
Seattle-based Amazon took a $1.8 billion charge for severance costs. On Tuesday, it announced it had cut 14,000 corporate jobs, a part of a plan that might lead to around 30,000 job losses in aggregate. It had added about 32,000 employees from this yr’s second quarter through the third for a workforce of 1.58 million people.
The workforce reduction was “probably not financially driven, and it’s not even really AI-driven,” said Jassy. “It’s culture.” He said Amazon’s growth had created too many layers of employees and “it might result in slowing you down.”
Results were also weighed down by a one-time $25 billion charge for a settlement reached with the Federal Trade Commission over allegations that Amazon tricked consumers about their Prime memberships.
Amazon’s cloud revenue rose on the fastest clip in nearly three years, helping the corporate forecast quarterly sales above estimates and driving its shares up 14% in after-market trading.
The corporate projected increased capital spending next yr.
The web retailer benefited as businesses proceed to spend relentlessly on artificial intelligence software development. Massive cloud demand helps the tech company ease the pressure from softer growth at its e-commerce business, which is gearing up for the critical holiday season amid weakness in consumer confidence stemming from global trade uncertainty.
Amazon’s rally in prolonged trading lifted the corporate’s market value by about $330 billion. A stock rally of the identical size in Friday’s official trading session would make it Amazon’s biggest one-day percentage gain since 2015.
“AWS is growing at a pace we haven’t seen since 2022,” CEO Andy Jassy said in an announcement. “We proceed to see strong demand in AI and core infrastructure, and we’ve been focused on accelerating capability.”
Amazon Chief Financial Officer Brian Olsavsky said he expected full-year capital expenditures to be around $125 billion, and better next yr, without providing details. The corporate booked $89.9 billion in capital expenditures through the primary three quarters, largely on AI projects.
Cloud revenue jumps
Its cloud unit, Amazon Web Services, reported a 20% rise in revenue within the third quarter ending in September, compared with estimates of a 17.95% increase. Amazon shrugged off a tricky prior week when an prolonged outage at AWS felled a lot of the preferred web sites and consumer apps.
Amazon has been the worst-performing stock among the many “Magnificent 7” megacap tech corporations, due partially to a nagging fame as a laggard in AI development.
“The report confirms Amazon’s operations are firing on all cylinders after a yr of relative underperformance,” said Ethan Feller, stock strategist at Zacks Investment Research. He said despite the stock’s nearly flat growth this yr, “the corporate’s fundamentals never meaningfully weakened.”
Amazon projected total net sales of between $206 billion and $213 billion for the fourth quarter, while analysts on average were expecting revenue of $208.12 billion, based on data compiled by LSEG.
Normally subdued, Jassy adopted an exuberant tone on the decision with analysts.
“I take a look at the momentum we’ve got right away, and I consider that we are able to proceed to grow and click on like this for some time,” he said. “I feel there are multiple places where we are able to expect to proceed to grow,” he added, referring to promoting and retail sales.
The strong results from AWS, the world’s largest cloud provider, followed stellar cloud revenue growth reported on Wednesday by Microsoft’s Azure and Google Cloud, the No. 2 and No. 3 players within the industry, respectively.
Microsoft, Google parent Alphabet and Facebook owner Meta all announced plans for higher annual capital expenditures as they pour money into chips and data centers.
Big Tech continues AI spending
Jassy’s comments echoed those from rival CEOs, indicating Big Tech has no plans to pump the brakes on AI spending despite Wall Street expressing concern a couple of possible investment bubble. Corporations, including Amazon, are introducing AI into nearly every facet of their operations in hopes of reducing costs and boosting productivity.
On Wednesday, Federal Reserve Chair Jerome Powell said he didn’t consider the AI boom is a speculative bubble just like the dot-com era, when many corporations were “ideas fairly than businesses.” Today’s AI leaders “even have earnings,” he said. He added that AI investments – especially in data centers, chips, and infrastructure – were a serious source of economic growth. He did warn about AI’s impact on the labor market.
AWS typically accounts for a bit greater than 15% of Amazon’s total revenue, however the segment is a big profit engine, making up roughly 60% of the corporate’s total operating income. The unit reported revenue growth of 17.5% within the second quarter.
Promoting was one other shiny spot. Sales increased 24% from a yr earlier to $17.7 billion. The corporate has been placing greater emphasis on sponsored product listings and finding latest spaces for higher ad volume, corresponding to Echo Show screens and hi-tech grocery shopping carts.
Seattle-based Amazon took a $1.8 billion charge for severance costs. On Tuesday, it announced it had cut 14,000 corporate jobs, a part of a plan that might lead to around 30,000 job losses in aggregate. It had added about 32,000 employees from this yr’s second quarter through the third for a workforce of 1.58 million people.
The workforce reduction was “probably not financially driven, and it’s not even really AI-driven,” said Jassy. “It’s culture.” He said Amazon’s growth had created too many layers of employees and “it might result in slowing you down.”
Results were also weighed down by a one-time $25 billion charge for a settlement reached with the Federal Trade Commission over allegations that Amazon tricked consumers about their Prime memberships.
