Amazon CEO Andy Jassy speaks at the Amazon device launch event in New York City, USA on February 26, 2025.
Brendan McDiarmid | Reuters
Amazon shares soared 12% on Friday after the company reported an overall strong third quarter and revised up its spending forecast due to demand for artificial intelligence services.
Cloud is a key driver of revenue and profit growth, and Amazon Web Services’ revenue rose 20% year-over-year to $33 billion, beating expectations.
The segment’s operating profit was $11.4 billion, accounting for about two-thirds of Amazon’s total operating profit.
Revenue from its digital advertising business, another growth engine, rose 24% to $17.7 billion. Amazon’s total revenue rose 13% to $180.17 billion, beating the average analyst estimate of $177.8 billion, according to LSEG. Earnings per share came to $1.95, beating the average estimate of $1.57.
“Amazon’s unparalleled scale creates deep moats around its core business,” analysts at Pivotal Research wrote in a post-report note.
Analysts recommending the stock be a buy, saying Amazon appears to have plenty of opportunities for healthy organic growth with its “high-margin AWS cloud division” and areas such as advertising.
When it comes to revenue, cloud is a major concern due to increased competition from Google and Microsoft, which also released quarterly results this week. Google’s cloud revenue increased 34% in the third quarter, while Microsoft Azure posted 40% growth.
Amazon’s stock price was up just 1.6% in the year ahead of the report, well behind its giant-cap peers.
The company remains a leading provider of cloud infrastructure technology, but it is battling the perception that it is missing out on a flurry of lucrative AI deals for cloud services.
But when it comes to spending, Amazon outperforms its rivals.
Amazon raised its forecast for capital spending this year, saying it now expects to spend $125 billion in 2025, up from its previous forecast of $118 billion. CFO Brian Olsavsky said that number is likely to increase in 2026. Google, meta Microsoft also raised its capital spending guidance, but both were lower than Amazon.
Amazon said it expects sales for the current quarter to be between $206 billion and $213 billion. According to LSEG, the midpoint of its sales outlook of $209.5 billion was higher than expectations of $208 billion.
While investors cheered Amazon’s results, it’s been a tough week for the company’s broader workforce.
Amazon said Tuesday it will lay off 14,000 employees as part of a push to make the company leaner and less bureaucratic to allow it to move more quickly. Further cuts are expected soon, and Jassy said that “at least for now” it will not be “fiscal-driven” or AI-driven.
“It’s really a culture,” Jassy said. “When you grow as rapidly as we have over the last few years, you increase the size of your business, the number of employees, the number of locations, the types of businesses, and you end up with a lot more people and a lot more demographic than before.”
The company ended the quarter with approximately 1.58 million employees, an increase of 2% from the same period last year.
Sales at Amazon’s core online store division grew 10% in the quarter, including the result of July’s Prime Day discount event.
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