Amazon soars as Q3 earnings, sales beat Wall Street expectations

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.