Amazon reports cloud unit grew at fastest pace since 2022
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Amazon Web Services reported third-quarter revenue of US$33 billion (S$42.9 billion), an increase of 20 per cent from the prior year.
PHOTO: REUTERS
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SEATTLE – Amazon.com’s cloud unit posted the strongest growth rate in almost three years, reassuring investors who were concerned that the largest seller of rented computing power was losing ground to rivals.
Amazon Web Services (AWS) reported third-quarter revenue of US$33 billion (S$42.9 billion), an increase of 20 per cent from the prior year and the biggest year-over-year rise since the end of 2022. Analysts, on average, estimated 18 per cent growth.
Amazon shares jumped about 13 per cent in extended trading after closing at US$222.86 in New York. The stock has lagged behind that of its industry peers in 2025, with investors worrying that the company has yet to benefit enough from its artificial intelligence (AI) products. In its most recent quarter, Microsoft’s Azure cloud business grew at almost twice the rate of AWS, while Alphabet’s Google Cloud posted 33.5 per cent growth.
Amazon chief executive Andy Jassy opened a conference call with analysts after the results were released by cheering the prospects for AWS and rattling off figures on the impact of AI on the company’s businesses, most of which Amazon had not disclosed previously.
The company estimates that Rufus, the shopping chatbot embedded in its retail apps, will help deliver an additional US$10 billion in annual sales. Connect, the company’s call centre product that is widely seen as its most successful software offering for office workers, is on track to pull in US$1 billion in annualised revenue, Mr Jassy said. Bedrock, the AWS marketplace for businesses to tap AI models, could ultimately be as big a business as EC2, the computing service that is one of the cloud unit’s primary moneymakers.
“We have momentum,” he said. “You can see it.”
During the quarter that ended on Sept 30, Amazon’s total revenue rose 13 per cent to US$180.2 billion, the company said in a statement. Analysts, on average, were anticipating US$177.8 billion, according to data compiled by Bloomberg.
The strong performance of Amazon’s cloud business and its core retail business likely reassured investors worried that the company was spending too much money
“We are seeing good evidence of the AWS business performing very well,” she said. “It doesn’t feel bubbly to me. It just feels like a business firing on all cylinders.”
Like its biggest rivals, Amazon has invested heavily in data centres and chips to build and operate AI models capable of generating text or images and automating processes. Capital expenditures rose 61 per cent to a record US$34.2 billion in the quarter, chief financial officer Brian Olsavsky said.
The power capacity of the AWS data centre fleet has doubled since 2022, and Mr Jassy said he expected it to double again by 2027. Last week, the unit suffered its biggest outage in years.
Though Amazon has sought to position its cloud business as a marketplace for a broad range of AI tools, for now, it has a lot riding on a single partner: Anthropic, the maker of the Claude chatbot and software coding assistant.
Amazon is backing Anthropic with an investment of US$8 billion, and built the start-up a massive complex of data centre and custom AWS AI chips. That system, called Project Rainier, is up and running, the company said this week. Amazon said its Trainium2 chip was “fully subscribed” and represented a multibillion-dollar business.
Google recently announced a deal to provide Anthropic with some of its own chips.
In the third quarter, Amazon reported operating income of US$17.4 billion, which included a US$2.5 billion charge related to a legal settlement announced in September with the Federal Trade Commission over Prime subscriptions and US$1.8 billion for estimated severance costs. The company said earlier this week that it would cut about 14,000 corporate workers
