Amazon.com Inc.’s stock jumped more than 11% in early Friday trading following better-than-expected financial results from its cloud computing division and an optimistic sales forecast helped ease investor worries that the e-commerce giant was lagging competitors in artificial intelligence (AI) development.
The company’s cloud computing arm, Amazon Web Services, posted 20% revenue growth in the third quarter, marking its fastest pace since 2022 and vindicating Amazon’s recent AI investments and expansion efforts.
Rivals Microsoft Azure and Google Cloud reported faster growth rates — 40% and 34%, respectively — but AWS maintains a significant size advantage. Its quarterly revenue of $33 billion is more than double Google Cloud’s $15.2 billion.
“We continue to see strong momentum and growth across Amazon as AI drives meaningful improvements in every corner of our business,” Amazon CEO Andy Jassy said in a news release. “AWS is growing at a pace we haven’t seen since 2022. 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.”
Amazon said Anthropic’s use of its Trainium2 chip, and the impending release of Trainium3, should extend AWS’ growth through 2026.
The better-than-expected results may alleviate mounting concerns that Amazon is losing ground to rivals Microsoft Corp. and Alphabet Inc.’s Google in the race to capitalize on AI demand.
Financial analysts on Wall Street hailed the results as evidence of a turnaround for AWS, which had faced questions about its competitive positioning in the rapidly evolving AI landscape.
“There was definitely concern about AWS losing market share to Microsoft Azure and Google Cloud,” said Jed Ellerbroek, a portfolio manager at Argent Capital. “But now AWS is aboard the train as well and they’re seeing a big revenue increase.”
Despite holding the largest market share in cloud services, AWS has faced questions about whether its dominance would erode as AI reshapes the competitive landscape in cloud computing.
Investors have focused on Amazon’s AI strategy as Microsoft Azure and Google Cloud have posted faster growth rates and demonstrated sharper revenue acceleration in recent quarters. Both competitors hold potential AI advantages: Google develops its proprietary Gemini AI models, while Microsoft maintains a high-profile partnership with OpenAI, creator of ChatGPT.
Amazon shares tumbled in late July following second-quarter results that one analyst characterized as a “mixed print and an even tougher conference call.” Jassy, meanwhile, was criticized for failing to adequately address concerns about AWS capabilities in the AI space.
On Thursday’s earnings call, Jassy mounted a more forceful defense, emphasizing that AWS offers “more services and deeper features within those services than anybody else.” He predicted Amazon would emerge as a leader in helping enterprises deploy AI agents.
The company has doubled AWS capacity since 2022, Jassy said, and expects to double it again by 2027.
Jassy also challenged direct comparisons of AWS revenue growth to Microsoft, Google, and Oracle Corp., noting the importance of context when evaluating percentage gains.
“It’s worth remembering that year-over-year percentage growth is a relative term,” Jassy told analysts. “It’s very different having 20% year-over-year growth on a $132 billion annualized run rate and to have a higher percentage growth rate on a meaningfully smaller annual revenue, which is the case with our competitors.”
