Amazon's cloud business posted its best revenue growth in nearly three years. Shares soared

Global online commerce giant Amazon reported a 20% increase in revenue for its Amazon Web Services cloud business in the third quarter. This became the best dynamics in almost three years. Amazon shares rose about 14% on the premarket after the report was published.

Amazon Web Services revenue rose to $33 billion in the third quarter. Analysts surveyed by StreetAccount had forecast $32.42 billion, which would correspond to an 18.1% increase, CNBC writes.

AWS showed the highest growth rate since the end of 2022: this will give confidence to investors concerned that the largest seller of leased computing capacity is losing ground to competitors, notes Bloomberg. By comparison, Google's cloud division's revenue grew 33% in the same quarter, while Microsoft Azure added 40%. At the same time, AWS remains the world's largest cloud infrastructure provider.

"We continue to see strong demand for AI and core infrastructure and are focused on building capacity - we've added more than 3.8 gigawatts in the last 12 months," Amazon President and CEO Andy Jesse said, he was quoted as saying in a company statement.

Shares of Amazon soared in extended trading on October 30 after the publication of reports by more than 14%: the price reached about $255. The main session ended with a 3.2% drop to $222.86.

Amazon's total revenue in the third quarter rose 13% year-over-year to $180.2 billion. Analysts, according to Bloomberg, had on average forecast $177.8 billion.

Amazon's online store sales increased 10% to $67.4 billion, while revenue from its advertising division added 24% to $17.7 billion. Revenue from third-party sellers using Amazon's platform increased 12% to $42.49 billion.

The company reported an operating profit of $17.4 billion. That result takes into account a one-time $2.5 billion write-off related to the settlement of a U.S. Federal Trade Commission lawsuit over Prime subscriptions and $1.8 billion of estimated costs for layoffs. This week, Amazon announced layoffs of about 14,000 employees in its corporate segment and warned of likely continued layoffs in 2026.

In the current, fourth quarter, Amazon expects revenue in the range of $206 billion to $213 billion, which is in line with analysts' forecasts, Bloomberg writes. The operating profit forecast is between $21 billion and $26 billion, which is also within expectations.

Amazon is trying to improve margins in its retail business by automating and growing sales of advertising and other services for third-party sellers. However, investors are now focused on the company's initiatives related to artificial intelligence, Bloomberg writes.

Amazon is aggressively investing in data centers and AI chips to build and maintain AI models capable of generating text, images and automating business processes. For the third quarter, Amazon's capital expenditures rose 55% to $35.1 billion - more than analysts expected, Bloomberg reports.

But AWS's strong results are likely to reassure investors worried that the company is spending too much on chasing the AI bubble, said S&P Global analyst Melissa Otto. "We're seeing strong evidence that AWS is performing well," she told Bloomberg. - It doesn't look like a bubble. It's more like a business operating at full capacity."

On Wednesday, October 29, Amazon officially opened Project Rainier, an $11 billion data center designed to train and run AI models for startup Anthropic, which is developing chatbot Claude. Amazon has invested $8 billion in Anthropic and said this week that the startup will power 1 million custom Trainium2 chips by the end of 2025. The company claims that data centers with Trainium2 chips have been "fully booked" and will generate billions of dollars in revenue for the company.

Amazon shares are up only 1.6% since the start of 2025. Most analysts advise buying the securities: they have 73 ratings, of which only three are Hold and the rest are Buy or Overweight ("above market"), MarketWatch shows. The average target price of $267.31 is 20% above the close of major trading on Oct. 30.

This article was AI-translated and verified by a human editor