Amazon’s stock price jumped more than 13% in after-hours trading on Thursday after the company reported third-quarter results that beat every Wall Street projection.
The company posted $180.2 billion in revenue, up 13% year over year, and $1.95 earnings per share, crushing the $1.57 EPS analysts were expecting, and investors responded immediately.
Amazon Web Services, the company’s cloud business, brought in $33 billion during the quarter. That was ahead of the expected $32.42 billion, and up 20.2% from the same time last year.
Cloud has been a pressure point for Amazon in recent quarters, especially as rivals Microsoft and Google continue pulling in more AI-focused enterprise clients. Microsoft’s Azure division saw 40% growth.
Google Cloud rose 34%. Amazon CEO Andy Jassy said AWS is “growing at a pace we haven’t seen since 2022” and added that demand for artificial intelligence infrastructure is rising fast.
“We continue to see strong demand in AI and core infrastructure, and we’ve been focused on accelerating capacity, adding more than 3.8 gigawatts in the past 12 months,” Andy said in a written statement.
AWS’s performance helped push total revenue above forecasts, and the company’s advertising unit also topped expectations. Ads revenue came in at $17.7 billion, slightly above the $17.34 billion Wall Street wanted.
The core online stores division also posted 10% growth during the quarter, showing consumers are still spending on Amazon even as Trump’s shifting trade policies loom over the retail space.
Amazon builds Project Rainier to run Anthropic models
On Wednesday, Amazon opened a new $11 billion AI data center, called Project Rainier, designed to host and train models from the Claude chatbot developer Anthropic.
Amazon has already committed $8 billion to Anthropic, and said the startup will use 1 million custom Trainium2 chips by the end of 2025.
The move comes as cloud players battle over AI deals, and Amazon’s Project Rainier is intended to silence concerns that the company is falling behind. Anthropic also expanded its relationship with Google in a multi-billion-dollar cloud partnership last week. Meanwhile, Meta signed major cloud contracts with Google and Oracle.
Amazon’s AI efforts also include Q, a chatbot aimed at business users, and Bedrock, a generative AI platform for cloud clients. The company said 250 million shoppers used its retail assistant Rufus this year, and 60% of them were more likely to make a purchase after using the chatbot.
Despite doubling down on AI, Amazon is cutting costs elsewhere. On Tuesday, the company confirmed it will lay off 14,000 corporate employees. The move is aimed at making the company faster and less bureaucratic.
“We’re reorganizing to respond faster, especially around AI,” a spokesperson said. The layoffs pushed severance costs to $1.8 billion for the quarter. Amazon said the current employee count is 1.58 million, a 2% jump from last year.
Amazon posts flat income, settles with FTC over Prime
Amazon reported $17.4 billion in operating income, which was flat compared to the same period last year. But the number includes two major items: a $2.5 billion settlement with the Federal Trade Commission over “deceptive” Prime subscription practices, and the $1.8 billion in severance tied to its latest round of layoffs.
Looking ahead, the company said it expects fourth-quarter revenue to land between $206 billion and $213 billion, with the midpoint, $209.5 billion, above the $208 billion analysts had penciled in.
Expected operating income ranges between $21 billion and $26 billion, compared to the average Wall Street forecast of $23.8 billion.
Andy said tariffs could still affect Amazon’s performance. During last quarter’s call, he noted that the tariff increases under President Donald Trump hadn’t hurt consumer demand or forced any price spikes… at least not yet.
But trade policies remain on Amazon’s radar. The company also warned that guidance could change depending on how things evolve politically.
The company’s Q3 release came just over a week after an AWS outage that lasted more than 15 hours, knocking multiple websites offline. Microsoft also experienced outages with its Azure and 365 platforms just before its earnings report.
Despite those issues, all three companies remain locked in a race for AI dominance through cloud infrastructure.
Amazon is still the biggest cloud infrastructure provider in the world, but the race for generative AI dominance is forcing everyone to spend fast and scale faster.
The Rainier center, the Anthropic chip deal, and new AI services are Amazon’s current answers. Now Wall Street will be watching if those moves are enough to close the gap on its faster-growing competitors.
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Source: https://www.cryptopolitan.com/amazon-stock-surges-13-after-q3-beat/
