Amazon shares jumped more than 13% in extended trading Thursday after the company posted third-quarter earnings that exceeded expectations, along with strong growth in its cloud-computing unit.
Here’s how the company did, compared with estimates from analysts polled by LSEG:
- Earnings per share: $1.95 vs. $1.57 estimated
- Revenue: $180.17 billion vs. $177.8 billion estimated
Wall Street was also looking at other key revenue numbers:
- Amazon Web Services: $33 billion vs. $32.42 billion expected, according to StreetAccount
- Advertising: $17.7 billion vs. $17.34 billion expected, according to StreetAccount
Revenue in Amazon’s cloud unit accelerated 20.2% during the quarter, surpassing analysts’ expectations of 18.1%. Cloud growth has been a key area of concern for the company, as it faces intensifying pressure from rivals Google and Microsoft, which also reported quarterly results this week.
Google’s cloud revenue increased 34% during the third quarter, while Microsoft Azure recorded growth of 40%.
Amazon CEO Andy Jassy said in a statement that AWS is “growing at a pace we haven’t seen since 2022” and touted robust artificial intelligence demand.
“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,” Jassy said.
While Amazon remains the leading provider of cloud infrastructure technology, it’s been battling the perception that it’s missing out on a flurry of highly lucrative AI deals for cloud services. That concern has weighed on Amazon’s stock, which is up roughly 1.6% year to date, trailing its Magnificent Seven peers.
The company on Wednesday opened its $11 billion AI data center called Project Rainier, built exclusively to run models from Claude chatbot creator Anthropic.
Amazon raised its forecast for capital expenditures this year, saying it now expects to spend $125 billion in 2025, up from its earlier estimate of $118 billion. CFO Brian Olsavsky said that number will likely increase in 2026.
For the current quarter, Amazon said it expects sales to be $206 billion to $213 billion. The midpoint of the revenue outlook, $209.5 billion, topped estimates of $208 billion, according to LSEG.
Operating income is expected to be between $21 billion and $26 billion, compared with analysts’ projected $23.8 billion.
AI has become a major area of investment across Amazon, including in its retail, cloud, devices and ads businesses. The company is responding to an explosion of interest around generative AI, particularly after the launch of OpenAI’s ChatGPT chatbot in 2022.
While it continues to invest in AI, Amazon has looked to cut costs in other areas. On Tuesday, Amazon said it will lay off 14,000 corporate employees, as part of a push to make the company leaner and less bureaucratic, so it can move faster.
Jassy addressed the layoffs during a conference call with investors, saying the announcement wasn’t “financially driven” or due to AI, “right now, at least.”
“It really it’s culture,” Jassy said. “If you grow, as fast as we did for several years, you know, the size of the businesses, the number of people, the number of locations, the types of businesses you’re in, you end up with a lot more people than what you had before, and you end up with a lot more layers.”
Amazon has in recent years shaved its headcount after going on a hiring spree during the pandemic, which caused its corporate and frontline workforces to balloon. The company finished the quarter with about 1.58 million employees, which was a 2% increase from the year ago period.
Operating income was flat year over year in the quarter at $17.4 billion. The company said the number reflects its $2.5 billion settlement with the Federal Trade Commission, reached in September, over the agency’s “deceptive” Prime signups lawsuit.
It also includes about $1.8 billion in severance costs “primarily related to planned role eliminations,” the company said.
Amazon year-to-date stock chart.
Amazon has introduced Q, a chatbot for businesses, and Bedrock, a generative AI service for cloud customers. Last February, it rolled out a shopping chatbot called Rufus that can answer questions and suggest products.
The company said 250 million shoppers have used Rufus this year, with 60% of users “more likely to complete a purchase” after interacting with the chatbot.
Sales in Amazon’s core online stores unit posted solid growth of 10% during the quarter, which includes the results of its Prime Day discount event in July.
The company has been navigating uncertainty around President Donald Trump’s shifting trade policies, though Jassy told investors last quarter that the tariff increases haven’t dented consumer demand or led to significant price increases.
Amazon also cited tariffs and trade policy as factors that could make its guidance subject to change.
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