A faster quarter for the cloud leader
Amazon's cloud division delivered third-quarter revenue of $45.98 billion, a 39% increase from a year earlier, according to the company's statement. That figure exceeded the $45.29 billion analysts surveyed by StreetAccount had expected, and it marked an acceleration from roughly 37% growth in the prior quarter. It was also the unit's strongest expansion since the final three months of 2021.[S1][S2]
Profitability at the unit improved as well. AWS recorded $17.77 billion in operating income for the quarter, a 55% rise that surpassed the $16.97 billion StreetAccount consensus. The segment now represents nearly 23% of Amazon's total revenue, the highest share on record, underscoring how central cloud computing has become to the company's finances.[S1]
Rivals are speeding up too
Amazon continues to hold the largest share of cloud revenue, yet rivals are expanding at a quicker pace. Alphabet reported that Google Cloud — covering infrastructure offerings plus Google Workspace subscriptions — more than doubled during the third quarter. Microsoft, for its part, released Azure's revenue in dollar terms for the first time, showing Azure has reached 72% of AWS's size, up from 58% two years earlier.[S1]
The major providers are all spending heavily on data centers built to handle surging artificial intelligence demand. During the quarter AWS outlined plans to broaden its lineup of Nvidia graphics processors suited to AI work, acquired the data-analysis startup DuckLabs, and announced agreements with Meta and OpenAI. AWS launched its first services in 2006, ahead of both Azure and Google Cloud.[S1]
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Chip strategy and a long-range forecast
Google has lifted its cloud revenue by offering its tensor processing units for AI outside its own data centers, and Amazon intends to follow a similar path with its Trainium chips used for training models. Andy Jassy, Amazon's chief executive, said demand for Trainium is strong and that customers keep asking for access beyond AWS, with availability planned for late 2027.[S1]
Jassy also offered an expansive outlook, telling analysts he expects AWS to expand by more than 40% in both 2027 and 2028 and to become a trillion-dollar revenue business within five to 10 years. Investors did not reward the quarter overall: Amazon's stock slid after the company's third-quarter earnings missed expectations, even as cloud growth stayed strong.[S1][S3]
