Amazon’s (AMZN) stock is up 13% after the e-commerce company posted third-quarter financial results that exceeded analysts’ expectations, driven by 20% growth in its cloud-computing unit.
Amazon announced earnings per share (EPS) of $1.95 U.S., which beat the $1.57 U.S. that was forecast on Wall Street.
Revenue of $180.17 billion U.S. topped the $177.8 billion U.S. that analysts had penciled in for the technology giant.
Among its key business units, Amazon Web Services (AWS) reported $33 billion U.S. of revenue, which exceeded the $32.42 billion U.S. that had been expected.
Advertising revenue of $17.70 billion U.S. surpassed estimates of $17.34 billion U.S.
Revenue in AWS, the cloud unit, grew 20.2% during the third quarter, surpassing expectations of 18.1% growth.
Cloud growth has been an area of concern for investors and analysts as Amazon faces rising competition from rivals Alphabet (GOOGL) and Microsoft (MSFT).
Google’s cloud revenue increased 34% during this year’s third quarter and Microsoft’s cloud sales expanded by 40%.
Amazon CEO Andy Jassy said in the company’s earnings release that cloud computing is “growing at a pace we haven’t seen since 2022” due to robust artificial intelligence (A.I.) demand.
Amazon recently opened its $11 billion U.S. A.I. data centre called “Project Rainier.”
In terms of guidance, Amazon raised its forecast for capital expenditures this year, saying it now expects to spend $125 billion U.S. in 2025, up from an earlier estimate of $118 billion U.S.
Most of the capex spending will go towards A.I., said the company, which expects spending to increase further in 2026.
Amazon just cut 14,000 corporate jobs as part of a push to make the company leaner and less bureaucratic, and so it can invest more money into A.I.
For the current fourth quarter, Amazon expects sales of $206 billion U.S. to $213 billion U.S. The midpoint of that outlook, $209.5 billion U.S., is above estimates of $208 billion U.S.
Operating income in Q4 is forecast to be between $21 billion U.S. and $26 billion U.S., compared with analysts’ projections of $23.8 billion U.S.
Prior to today (Oct. 31), AMZN stock had risen 1% this year to trade at $222.86 U.S. per share.
