Amazon's stock experienced a significant jump in after-hours trading following the release of its third-quarter financial results, which surpassed Wall Street's expectations. The company's cloud computing division, Amazon Web Services (AWS), was a key driver, posting growth figures that eased recent investor concerns about its market position.
The technology giant reported substantial increases in both earnings and revenue for the quarter ending in September, signaling strong momentum heading into the critical holiday season. The performance of AWS, in particular, suggests a reacceleration in a segment closely watched by the market.
Key Takeaways
- Amazon reported adjusted earnings of $1.95 per share, significantly higher than the forecasted $1.57.
- Total sales for the third quarter reached $180.2 billion, a 13% increase from the previous year.
- Amazon Web Services (AWS) sales grew by 20% to $33 billion, exceeding analyst predictions of 18.1% growth.
- The company's stock rose by more than 10% in after-hours trading following the announcement.
Quarterly Earnings Exceed Forecasts
Amazon announced impressive financial results for its third quarter, demonstrating robust health across its business segments. The company's adjusted earnings per share came in at $1.95, a 33% increase compared to the same period last year. This figure comfortably beat the analyst consensus of $1.57 per share.
Overall revenue also showed strong growth, rising 13% year-over-year to $180.2 billion. This result was ahead of the $177.91 billion that market analysts had projected for the quarter. The broad-based growth indicates healthy consumer and enterprise demand.
AWS Becomes the Star Performer
The standout element of the earnings report was the performance of Amazon Web Services. The cloud division saw its sales climb by 20% to $33 billion. This growth rate was a significant surprise to investors, as many analysts did not anticipate AWS would return to a growth rate above 20% before 2026.
Competitive Landscape
The strong AWS numbers help to counter a prevailing market narrative that Amazon was losing ground in the cloud computing space. Competitors like Microsoft and Google's parent company, Alphabet, have been making significant gains driven by their artificial intelligence offerings, leading to concerns about AWS's market share. This quarter's results directly address those fears.
Amazon's leadership credited the momentum to the increasing integration of artificial intelligence across its services. CEO Andy Jassy highlighted the trend in the company's earnings release.
"We continue to see strong momentum and growth across Amazon as AI drives meaningful improvements in every corner of our business. AWS is growing at a pace we haven't seen since 2022."
Expanding Infrastructure for AI Demand
Jassy also pointed to the company's focus on expanding its infrastructure to meet the growing demand for AI and core cloud services. This expansion is a tangible sign of Amazon's investment in future growth.
To meet rising demand, Amazon has been rapidly scaling its infrastructure, adding more than 3.8 gigawatts of capacity in the past 12 months alone.
This aggressive build-out underscores the company's confidence in sustained demand for its cloud and AI platforms, positioning it to capture further growth in the burgeoning AI market.
Market Reaction and Future Outlook
Investors reacted positively to the news. In after-hours trading, Amazon's stock (AMZN) surged by more than 10%, climbing to $246.71 per share. This jump is particularly notable given the stock's relatively lackluster performance earlier in the year.
Prior to the earnings release, Amazon shares had only gained 2.2% year-to-date, significantly trailing the S&P 500's 16% rally. The strong report and subsequent stock movement could signal a shift in investor sentiment.
Looking ahead to the fourth quarter, which includes the vital holiday shopping period, Amazon provided optimistic guidance. The company projects sales to be around $209.5 billion at the midpoint of its range, slightly ahead of the $208.41 billion analysts were expecting. For operating income, Amazon forecasts a midpoint of $23.5 billion, which is closely aligned with the analyst projection of $23.8 billion.
