Amazon's shares jumped 10.81% following a third-quarter earnings report that surpassed expectations across the board, with the company boosting its forecast for capital expenditures due to strong demand for artificial intelligence services. This surge was significantly propelled by the performance of Amazon Web Services (AWS), its cloud computing unit, which saw sales climb 20% year-over-year to $33 billion, exceeding analyst estimates. This marks the fastest growth rate for AWS in nearly three years, after concerns that it was losing ground to rivals like Google and Microsoft.
AWS was a major driver of both revenue and profit growth, generating an operating income of $11.4 billion, which accounted for approximately two-thirds of Amazon's total operating profit. The company's overall revenue climbed 13% to $180.17 billion, outperforming the average analyst estimate of $177.8 billion. Earnings per share also exceeded projections, coming in at $1.95 against an average estimate of $1.57. Amazon's digital advertising business also contributed significantly, with revenue jumping 24% to $17.7 billion.
Analysts from Pivotal Research highlighted Amazon's "deep moat around their core businesses driven by their unmatched scale" and pointed to the "healthy organic growth opportunities driven by their high margin AWS cloud segment" and advertising. Amazon has raised its capital expenditure forecast, now expecting to spend $125 billion in 2025, up from an earlier estimate of $118 billion, with CFO Brian Olsavsky indicating further increases in 2026. This increased spending contrasts with Microsoft and Google, who also raised their capex guidance but remained below Amazon's.
For the current quarter, Amazon predicts sales to be between $206 billion and $213 billion. The midpoint of this outlook, $209.5 billion, surpassed the LSEG estimate of $208 billion. This strong performance positions Amazon favorably against cloud competitors; while Google's cloud revenue increased 34% and Microsoft Azure grew 40% in the third quarter, AWS growth of 20% was its strongest in nearly three years and was a key factor in investor confidence.
