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Amazon shares jump 13% as AI powers fastest cloud growth in years
Ecommerce giant boosts capital expenditure as it builds more data centres
 Amazon reported earnings 10 days after a major outage of its cloud services hit customers © Isabella Falsetti/Bloomberg
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Tabby Kinder in New York
Publishedyesterday
|Updated22:40
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Amazon’s cloud business has reported its strongest quarterly growth in nearly three years amid booming demand for computing power linked to artificial intelligence.
The company’s shares jumped by about 13 per cent in after-hours trading on Thursday after Amazon Web Services posted a 20 per cent surge in sales to $33bn.
Growth at AWS, which rents server space to businesses to run their online services, beat analyst estimates for sales of $32.4bn and reassured investors who had been concerned the world’s largest cloud provider was losing ground to rivals such as Microsoft and Oracle.
Amazon’s overall revenues for the three months to the end of September rose 13 per cent to $180.2bn, while net income grew almost 40 per cent to $21.2bn compared with the same period last year.
Both revenues and income beat Wall Street predictions for $178bn and $17bn respectively, according to figures compiled by Visible Alpha.
Chief executive and president Andy Jassy said that strong growth was due to AI driving “meaningful improvements in every corner of our business”.
“AWS is growing at a pace we haven’t seen since 2022,” he said. “We continue to see strong demand in AI and core infrastructure, and we’ve been focused on accelerating capacity.”
Amazon is vying with its competitors to source the data centres, chips and energy needed to create and run advanced AI models. Rivals Google and Microsoft also posted better than expected cloud growth in their earnings on Wednesday.
Amazon is the “primary” cloud provider to, and a major investor in, Anthropic, maker of the Claude chatbot — which also recently signed a significant supply deal with Google. Oracle and Microsoft have meanwhile struck huge agreements to supply computing power to OpenAI.
The Seattle-based company has been growing its data centre footprint to expand its computing capacity. It said it had added more than 3.8 gigawatts of computing power in the past 12 months.
Amazon’s capital expenditure on AI infrastructure such as chips and data centres was $34.2bn in the quarter, higher than the $31.5bn expected by analysts, bringing the total it has spent so far this year to $89.9bn.
Combined with Google, Meta and Microsoft, the four tech giants spent $112bn on capex in the past quarter alone.
Jassy told investors in February that Amazon’s capital expenditure would total about $100bn this year.
Earlier this week, Amazon announced plans to cut 14,000 jobs across its corporate workforce as it looks to reduce costs while it expands spending on AI.
The company has been building its own “Trainium” AI chips in-house, as well as buying vast quantities of chips from Nvidia, Broadcom and AMD, as it seeks to reduce the cost of running AI services.
Jassy said during a call with analysts on Thursday that the job cuts were not directly driven by AI, adding “not right now at least”. He said Amazon wanted to operate “like the world’s largest start-up” and move quickly to capture a huge transformation happening in technology.
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The ecommerce group also reported robust retail sales, including record revenue from its annual “Prime Day” promotion in July. Amazon has increased sales even as its sellers have been hit by volatile US-China trade relations.
Amazon said that revenues in the fourth quarter of the year would be between $206bn and $213bn, a growth rate of 10 or 13 per cent year-on-year. Analysts had anticipated fourth-quarter sales of about $208.5bn.
Amazon reported its earnings just 10 days after its cloud business Amazon Web Services suffered a widespread outage that forced customers’ websites and apps offline.
Additional reporting by Rafe Rosner-Uddin |
