Amazon’s cloud business has driven a commendable turnaround, with Amazon Web Services (AWS) recording its fastest growth rate in nearly three years, sending the company’s shares up by 14% in after-hours trading and adding about $330 billion to its market value.
The e-commerce giant posted third-quarter revenue of $180.2 billion, up 13% year-on-year, surpassing analyst expectations of $177.8 billion.
Earnings per share stood at $1.95, beating the projected $1.57, while operating income reached $17.4 billion, a figure that would have climbed to $21.7 billion if not for one-time charges, including a $25 billion Federal Trade Commission (FTC) settlement and $1.8 billion in severance costs.
AWS led the growth, generating $33 billion in revenue, up 20.2%, its highest rise since 2022.
The Amazon cloud arm now contributes more than 60% of Amazon’s total operating income despite representing just around 15–17% of overall sales.
CEO Andy Jassy credited the growth to surging demand for artificial intelligence and core infrastructure services.
“AWS is growing at a pace we haven’t seen since 2022,” Jassy said. “We continue to see strong demand in AI and core infrastructure, and we’ve been focused on accelerating capacity.”
The company plans to increase its capital expenditure to about $125 billion this year, with even higher spending expected in 2026. Most of this investment will target AI infrastructure, mirroring similar commitments from Microsoft, Alphabet, and Meta, which are also ramping up spending on chips and data centres.
Despite a challenging week that saw a prolonged AWS outage disrupt several major platforms, Amazon cloud performance outshone expectations. Analysts estimate AWS revenue growth at 17.95%, making the 20% rise a strong recovery.
The performance has put Amazon back among the top-performing tech giants, reversing a period of underwhelming stock performance that had made it the weakest among the so-called “Magnificent Seven.”
Ethan Feller, a stock strategist at Zacks Investment Research, observed that the report reflects a renewed operational strength:
“The report confirms Amazon’s operations are firing on all cylinders after a year of relative underperformance. Despite the stock’s nearly flat growth this year, the company’s fundamentals never meaningfully weakened.”
Amazon projected fourth-quarter net sales between $206 billion and $213 billion, above the $208.12 billion average forecast compiled by LSEG. Jassy’s tone during the earnings call was notably upbeat.
“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, citing advertising and retail segments.
Advertising has become a powerful revenue engine, rising 24% year-over-year to $17.7 billion, supported by sponsored listings and new ad formats on Echo Show screens and smart shopping carts.
Meanwhile, North American sales grew 11% to $106.3 billion, and international sales climbed 14% to $40.9 billion.
However, Amazon’s restructuring continues. The company confirmed it had cut 14,000 corporate jobs, part of a larger plan that could affect up to 30,000 roles. Jassy clarified that the layoffs were not financially or AI-driven.
“It’s culture,” he explained. “Our growth created too many layers of workers and it can lead to slowing you down.”
The job cuts came alongside the one-time $25 billion FTC settlement over allegations that Amazon misled consumers about Prime membership cancellations.
Nonetheless, Amazon’s outlook remains strong. With AWS revenue surging, advertising expanding, and e-commerce stabilising ahead of the holiday season, the company appears stable for continued growth, even as global trade issues weigh on consumer trust.
