Amazon.com Inc. posted strong third-quarter earnings Thursday, exceeding Wall Street expectations as cloud and AI investments drove revenue growth. The results lifted shares over 9% in after-hours trading, boosting investor confidence in the company’s turnaround.
The Seattle-based company reported earnings per share of $1.95 on revenue of $180.2 billion, topping analyst estimates of $1.58 per share and $177.8 billion in revenue, according to Yahoo Finance. This marks one of Amazon’s strongest quarters since 2021, reflecting resilient consumer spending and a resurgence in its high-margin cloud segment.
“Amazon delivered another solid quarter of accelerating growth and strong execution,” CEO Andy Jassy said in a statement. “Our focus on AI infrastructure and efficiency continues to pay off, both for customers and shareholders.”
AWS Powers the Upside
Amazon Web Services (AWS) again led the way in profits, generating $33.01 billion in revenue, exceeding projections of $32.4 billion. AWS’s 20% year-over-year increase exceeded expectations and bolstered the business after a 15-hour outage this month disrupted large clients like Ring and Snapchat.
AWS’s operating income rose 9% to $11.4 billion, making up about two-thirds of Amazon’s total operating profit. “AWS remains the backbone of digital transformation for businesses worldwide,” said Adam Selipsky, AWS CEO. “More customers are moving advanced workloads to the cloud and exploring generative AI applications.”
That momentum coincides with Amazon’s launch of Project Rainier, a massive new AI data center designed to host large-scale model training and inference workloads. The project includes 500,000 Trainium2 chips, part of its proprietary AI hardware family, with adoption growing 150% quarter over quarter, making it a multibillion-dollar business line.
The AI Race Intensifies
AWS’s strong showing comes as cloud and AI competition heats up. The day before, Microsoft and Google reported their own results and committed to increased AI data center spending to boost their Azure and Google Cloud platforms. After their reports, Microsoft shares dropped nearly 3%, while Alphabet’s rose 2.5%, reflecting investor uncertainty in AI infrastructure.
“AI is reshaping every layer of the cloud stack,” said Dan Ives, managing director at Wedbush Securities, in an interview with CNBC. “Amazon is finally showing it can compete at scale with Microsoft and Google, especially now that its in-house chips and training clusters are proving their commercial value.”
Amazon invested $8 billion in AI startup Anthropic, which plans to use up to 1 million Trainium2 chips by late 2025. Analysts see this move as a strategic counter to Google’s expanded partnership with Anthropic, announced earlier this month in a multibillion-dollar deal.
Stock Performance and Outlook
Despite Thursday’s post-earnings rally, Amazon’s stock remains well behind its rivals this year — up just 2.4% year to date compared with Microsoft’s 24% and Google’s 49% gains. Analysts say the latest quarter suggests Amazon’s heavy spending on AI infrastructure may finally be translating into real growth.
“Amazon’s results demonstrate that its AI strategy is beginning to gain traction,” said Gene Munster, managing partner at Deepwater Asset Management, in a note to clients. “They’re playing the long game, and Wall Street is starting to recognize that.”
Jassy said Amazon will continue to invest in cloud optimization, logistics automation, and large-scale AI deployment. He noted the company’s “best days of innovation are still ahead.”
“Every business on Earth will ultimately need AI capabilities,” Jassy said. “And AWS is positioned to help them get there.”
Amazon’s next challenge will be sustaining momentum through the holiday quarter, its strongest season, while managing the high capital costs of its new AI infrastructure. For now, it seems to have convinced investors that its aggressive bets on artificial intelligence and cloud computing are paying off.
