Amazon soars as Q3 earnings, sales beat Wall Street expectations
AWS was the star of the show in Amazon’s results on Thursday.
Amazon shares soared after the company beat Wall Street’s expectations for third-quarter sales and profit, as revenue from its AWS business jumped.
The stock shot up 13% in recent after-hours trading, and has broadly held onto its gains in early trading on Friday.
The company posted $180.2 billion in sales for Q3, growing 13% from the same quarter a year earlier and topping analysts’ expectations of $177.9 billion.
Earnings per share came in at $1.95, blowing past analysts’ estimate of $1.57, as compiled by FactSet.
Amazon’s AWS cloud business saw revenue jump 20% year on year to $33 billion, powered by huge demand for AI. The Street was expecting $32.5 billion. Last week, a major AWS outage disrupted websites and platforms around the world, including Snapchat, Reddit, Roblox, and Venmo.
The company’s capital expenditure — a number that’s been watched closely in recent quarters as tech giants spend vast sums of money to build the infrastructure to power AI — totaled $35.1 billion, blowing past analysts’ forecasts of $31.9 billion and topping second-quarter spending of $32.18 billion.
Amazon gave guidance for fourth-quarter sales between $206 billion and $213 billion, compared with estimates of $208.4 billion. Operating income was forecast at $21 billion to $26 billion, topping Wall Street’s expectation of $19.73 billion.
Some highlights for the quarter:
Amazon added 3.8 gigawatts of computing capacity, an amount the company says is larger than any other cloud provider.
The company opened Project Rainier, its massive AI data center containing 500,000 of its custom Trainium2 chips.
Amazon said Trainium2 is a “fully subscribed” multibillion-dollar business that’s grown 150% since the second quarter.
Advertising revenue was $17.7 billion, up 24% year on year.
Subscription revenue (Amazon Prime, audiobooks, etc.) was up 11% year on year, at $12.6 billion for the quarter.
Amazon CEO Andy Jassy said:
“AWS is growing at a pace we haven’t seen since 2022, re-accelerating to 20.2% YoY. We continue to see strong demand in AI and core infrastructure, and we’ve been focused on accelerating capacity — adding more than 3.8 gigawatts in the past 12 months.”
On Wednesday, Amazon announced it would reduce its corporate workforce by a net 14,000 employees, after Reuters reported the number of roles reduced company-wide could reach 30,000. The cuts follow a report from The New York Times that reveled internal Amazon documents that show a desire to automate of up to 75% of its operations.
