Amazon’s cloud income grows faster than speed of light

Amazon’s third-quarter revenue and profitability are above forecasts amid the exponential growth in cloud computing and advertising. The stock rose by about 5% after the announcement.

Amazon Web Services’ cloud income is growing faster than it did at the same time last year while being marginally lower than anticipated. Sales rose 19% during the quarter compared to a 12% increase the previous year. The company faced slower growth in its cloud business in 2023 as consumers cut down on spending due to growing economic concerns.

AWS continues to develop more slowly than its main rivals. Alphabet’s Google Cloud revenue grew by about 35%, while Microsoft’s income from Azure and other cloud services was 33%.

Amazon CEO Andy Jassy estimates that the company will spend around $75 billion on capital expenditures in 2024, and he thinks the figure will rise in 2025.
Jassy on a call with analysts, “Generative AI is driving the increase bumps here.”

He states that stockholders “will feel good about this long term, that we’re aggressively pursuing it.” He called the opportunity “an unusually large, maybe once-in-a-lifetime type of opportunity.”

Advertising was another edge. Sales in the unit increased 19% year over year to $14.3 billion during the quarter, outpacing growth in Amazon’s primary retail segment.

Amazon continues to invest in data centers and hardware such as Nvidia GPUs to power its artificial intelligence products, resulting in an 81% increase in capital expenditures from $12.48 billion to $22.62 billion year over year. Amazon will unveil a new iteration of its Alexa voice assistant is driven by generative AI.

The company has already introduced AI products in its cloud and e-commerce operations. During an earnings call, Brian Olsavsky, the company’s chief financial officer, stated that 2024 capital expenditures will support the increasing need for IT infrastructure.

Amazon also stated that its revenue for the current quarter is expected to be between $181.5 billion and $188.5 billion, representing a 7% to 11% increase from the previous year. According to LSEG, the average analyst forecast of $186.2 billion was exceeded by the midpoint of that range, $185 billion.