Amazon’s share price soared by more than ten percent on Thursday after the company reported stronger than expected quarterly earnings, driven by rising demand for its cloud computing services.
The e-commerce and technology giant said total sales grew 13 percent to 180.2 billion dollars, while net income climbed to 21.2 billion dollars from 15.3 billion dollars a year earlier. Looking ahead, Amazon forecast fourth-quarter sales between 206 billion and 213 billion dollars, representing an increase of 10 to 13 percent.
Amazon Web Services (AWS), the company’s cloud division, posted a 20 percent revenue increase to 33 billion dollars in the third quarter. This marks AWS’s fastest growth since 2022, as businesses worldwide invest heavily in artificial intelligence infrastructure and applications.
The company’s cloud rivals, Microsoft and Google, also reported growth in their cloud segments earlier this week, attributing their gains to rapid adoption of AI-powered services. All three tech leaders are investing heavily in AI infrastructure, confident that rising demand for AI tools will justify the spending.
Although Amazon did not share specific figures for its AI investment, it revealed that its purchases of property and equipment rose by 50.9 billion dollars year-on-year. Analysts said this signals major spending on AI infrastructure. “The significant acceleration of AWS growth should help dispel some of the concerns that Amazon has been failing to keep up with Azure and Google Cloud,” said an industry analyst.
Amazon added 3.8 gigawatts of new power capacity over the past year to support AI infrastructure, the highest among cloud providers, and launched a large computing cluster containing nearly 500,000 custom AI chips.
AI computing requires significantly more electricity and cooling than traditional computing, creating pressure on local resources such as water supplies. “In our view, Amazon is right to make these investments as they will help provide the company with new avenues for growth and ensure it remains competitively sharp,” said another analyst.
Operating income stayed steady at 17.4 billion dollars, as the company absorbed two major charges: 2.5 billion dollars for a legal settlement with the Federal Trade Commission and 1.8 billion dollars in severance costs from job reductions. Amazon said it will cut 14,000 positions to streamline operations as it focuses on artificial intelligence investments.
Shortly after the results were released, Amazon’s shares jumped 11 percent in after-hours trading.
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