Amazon shares soar as AI demand boosts cloud revenue

Amazon shares soar as AI demand boosts cloud revenue

Amazon’s cloud revenue rose at the quickest clip in almost three years, serving to the company forecast quarterly sales above estimates and driving its shares up 14% in after-market buying and selling.

The company projected elevated capital spending next yr.

The on-line retailer benefited as companies continue to spend relentlessly on artificial intelligence software development. Massive cloud demand helps the tech company ease the stress from softer development at its e-commerce enterprise, which is gearing up for the crucial vacation season amid weak point in shopper confidence stemming from global commerce uncertainty.

AWS usually accounts for a bit of more than 15% of Amazon’s whole revenue, however the phase is a large revenue engine. REUTERS

Amazon’s rally in prolonged buying and selling lifted the company’s market worth by about $330 billion. A inventory rally of the same dimension in Friday’s official buying and selling session would make it Amazon’s largest one-day proportion achieve since 2015.

“AWS is growing at a pace we haven’t seen since 2022,” CEO Andy Jassy said in a press release. “We continue to see strong demand in AI and core infrastructure, and we’ve been focused on accelerating capacity.”

Amazon Chief Financial Officer Brian Olsavsky said he anticipated full-year capital expenditures to be round $125 billion, and better next yr, without offering particulars. The company booked $89.9 billion in capital expenditures by way of the first three quarters, largely on AI initiatives.

Cloud revenue jumps

Its cloud unit, Amazon Web Services, reported a 20% rise in revenue in the third quarter ending in September, in contrast with estimates of a 17.95% improve. Amazon shrugged off a tricky prior week when an prolonged outage at AWS felled many of the most common web sites and shopper apps.

Amazon has been the worst-performing inventory among the “Magnificent 7” megacap tech firms, due partially to a nagging popularity as a laggard in AI development.

Normally subdued, Jassy adopted an exuberant tone on the name with analysts. Jordan Strauss/Invision/AP

“The report confirms Amazon’s operations are firing on all cylinders after a year of relative underperformance,” said Ethan Feller, inventory strategist at Zacks Investment Research. He said despite the inventory’s almost flat development this yr, “the company’s fundamentals never meaningfully weakened.”

Amazon projected whole internet sales of between $206 billion and $213 billion for the fourth quarter, while analysts on common had been anticipating revenue of $208.12 billion, according to data compiled by LSEG.

Normally subdued, Jassy adopted an exuberant tone on the name with analysts.

“I look at the momentum we have right now, and I believe that we can continue to grow and click like this for a while,” he said. “I think there are multiple places where we can expect to continue to grow,” he added, referring to promoting and retail sales.

Amazon Web Services, reported a 20% rise in revenue in the third quarter. Above, An AI avatar demonstration at the AWS exhibitor stall at the India Mobile Congress 2025. REUTERS

The strong outcomes from AWS, the world’s largest cloud supplier, adopted stellar cloud revenue development reported on Wednesday by Microsoft’s Azure and Google  Cloud, the No. 2 and No. 3 gamers in the business, respectively.

Microsoft, Google guardian Alphabet and Facebook proprietor Meta all announced plans for larger annual capital expenditures as they pour cash into chips and data facilities.

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 about a doable funding bubble. Companies, including Amazon, are introducing AI into almost every aspect of their operations in hopes of decreasing prices and boosting productiveness.

On Wednesday, Federal Reserve Chair Jerome Powell said he didn’t imagine the AI increase is a speculative bubble like the dot-com period, when many firms had been “ideas rather than businesses.” Today’s AI leaders “actually have earnings,” he said. He added that AI investments – particularly in data facilities, chips, and infrastructure – had been a major source of financial development. He did warn about AI’s affect on the labor market.

On Wednesday, Federal Reserve Chair Jerome Powell said he didn’t imagine the AI increase is a speculative bubble like the dot-com period. REUTERS

AWS usually accounts for a bit of more than 15% of Amazon’s whole revenue, however the phase is a large revenue engine, making up roughly 60% of the company’s whole working revenue. The unit reported revenue development of 17.5% in the second quarter.

Advertising was another vivid spot. Sales elevated 24% from a yr earlier to $17.7 billion. The company has been inserting better emphasis on sponsored product listings and discovering new areas for larger advert quantity, such as Echo Show screens and hi-tech grocery procuring carts.

Seattle-based Amazon took a $1.8 billion cost for severance prices. On Tuesday, it announced it had minimize 14,000 company jobs, a part of a plan that might result in round 30,000 job losses in combination. It had added about 32,000 staff from this yr’s second quarter by way of the third for a workforce of 1.58 million people.

The workforce discount was “not really financially driven, and it’s not even really AI-driven,” said Jassy. “It’s culture.” He said Amazon’s development had created too many layers of staff and “it can lead to slowing you down.”

Results had been also weighed down by a one-time $25 billion cost for a settlement reached with the Federal Trade Commission over allegations that Amazon tricked shoppers about their Prime memberships.

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