Amazon shares jump as AWS posts fastest growth since 2022
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The news: Amazon shares jumped 10% in after-hours trading after it posted a sharp rise in profit, as strong demand for cloud and AI services helped offset slower retail growth.
The numbers: Third quarter net income rose to USD21.2 billion, driven by a rebound in Amazon Web Services, which delivered its fastest revenue growth since 2022 and lifted by pre-tax gains from its investment in Anthropic. Operating income, however, held flat at USD17.4 billion due to charges related to severance and a legal settlement.
The company said AWS revenue grew 20% to USD33 billion, its fastest rate since 2022, helping to offset slower retail momentum. That outpaced expectations, amid concerns the business was losing ground to rivals. Total revenue rose 13%, which was also ahead of forecasts.
The result sent shares rising about 10% in after-hours trading.
What they said: CEO Andy Jassy said in a statement that AWS is still seeing strong demand in AI and core infrastructure, with 3.8 gigawatts of capacity added over the past year.
“We continue to see strong momentum and growth across Amazon as AI drives meaningful improvements in every corner of our business,” Jassy said. “AWS is growing at a pace we haven’t seen since 2022, reaccelerating to 20.2% YoY. We continue to see strong demand in AI and core infrastructure, and we’ve been focused on accelerating capacity,” he added.
The company projected softer-than-expected sales for the December quarter, though it expects stronger operating profit.
Amazon is eliminating 14,000 roles across the company, with severance costs contributing to USD1.8 billion in charges this quarter, as it restructures to streamline operations and redirect investment.
The sources: Amazon, Wall Street Journal
