Amazon shares soar as AI demand boosts cloud revenue | Latest Tech News
Amazon’s cloud revenue rose at the quickest clip in practically three years, serving to the company forecast quarterly gross sales above estimates and driving its shares up 14% in after-market trading.
The company projected elevated capital spending next 12 months.
The online retailer benefited as companies continue to spend relentlessly on artificial intelligence software program development. Massive cloud demand helps the tech company ease the strain from softer growth at its e-commerce business, which is gearing up for the essential vacation season amid weak spot in shopper confidence stemming from global commerce uncertainty.
AWS usually accounts for a little more than 15% of Amazon’s complete revenue, but the phase is a enormous revenue engine. REUTERS
Amazon’s rally in prolonged trading lifted the company’s market worth by about $330 billion. A stock rally of the same measurement in Friday’s official trading session would make it Amazon’s greatest one-day share gain since 2015.
“AWS is growing at a pace we haven’t seen since 2022,” CEO Andy Jassy said in a assertion. “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 around $125 billion, and increased next 12 months, without offering particulars. The company booked $89.9 billion in capital expenditures through 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% increase. Amazon shrugged off a powerful prior week when an prolonged outage at AWS felled many of the most well-liked web sites and shopper apps.
Amazon has been the worst-performing stock among the “Magnificent 7” megacap tech firms, due in half to a nagging popularity as a laggard in AI development.
Normally subdued, Jassy adopted an exuberant tone on the call 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, stock strategist at Zacks Investment Research. He said despite the stock’s practically flat growth this 12 months, “the company’s fundamentals never meaningfully weakened.”
Amazon projected complete web gross sales of between $206 billion and $213 billion for the fourth quarter, while analysts on average had been anticipating revenue of $208.12 billion, according to data compiled by LSEG.
Normally subdued, Jassy adopted an exuberant tone on the call 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 gross 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 growth reported on Wednesday by Microsoft’s Azure and Google Cloud, the No. 2 and No. 3 gamers in the industry, respectively.
Microsoft, Google father or mother Alphabet and Facebook proprietor Meta all announced plans for increased annual capital expenditures as they pour money into chips and data facilities.
Big Tech continues AI spending
Jassy’s feedback 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 attainable investment bubble. Companies, including Amazon, are introducing AI into practically every side of their operations in hopes of lowering prices and boosting productiveness.
On Wednesday, Federal Reserve Chair Jerome Powell said he didn’t imagine the AI increase is a speculative bubble just 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 growth. He did warn about AI’s impression on the labor market.
On Wednesday, Federal Reserve Chair Jerome Powell said he didn’t imagine the AI increase is a speculative bubble just like the dot-com period. REUTERS
AWS usually accounts for a little more than 15% of Amazon’s complete revenue, but the phase is a enormous revenue engine, making up roughly 60% of the company’s complete working income. The unit reported revenue growth of 17.5% in the second quarter.
Advertising was another vivid spot. Sales elevated 24% from a 12 months earlier to $17.7 billion. The company has been putting higher emphasis on sponsored product listings and discovering new areas for increased advert quantity, such as Echo Show screens and hi-tech grocery purchasing carts.
Seattle-based Amazon took a $1.8 billion charge for severance prices. On Tuesday, it announced it had cut 14,000 company jobs, half of a plan that might outcome in around 30,000 job losses in mixture. It had added about 32,000 staff from this 12 months’s second quarter through 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 growth 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 charge for a settlement reached with the Federal Trade Commission over allegations that Amazon tricked customers about their Prime memberships.
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