Amazon reported strong third-quarter earnings and revenue that surpassed expectations, fueled by impressive growth in its cloud computing and advertising segments. The stock rose by approximately 7% following the announcement.
Notably, exceeding the $1.14 per share forecast by LSEG Amazon posted better-than-expected third-quarter earnings of $1.43 per share. Furthermore, Revenue for the quarter reached $158.88 billion, surpassing the anticipated $157.2 billion. According to StreetAccount, key segments also showed strong performance, with Amazon Web Services generating $27.4 billion, slightly below the $27.5 billion expected, and Advertising matching expectations at $14.3 billion.
Additionally, for the quarter Amazon Web Services (AWS) revenue fell slightly short of consensus estimates but showed stronger growth compared to the same period last year. AWS sales increased by 19%, accelerating from the 12% growth seen in the previous year, when economic concerns had prompted customers to cut back on cloud spending.
As the company ramps up investments in data centers and advanced technologies such as Nvidia GPUs to enhance its artificial intelligence products, Amazon’s capital expenditures rose sharply by 81% year-over-year, from $12.48 billion to $22.62 billion. Amazon CFO Brian Olsavsky stated that a significant portion of the company’s 2024 capital spending will be dedicated to supporting the growing demand for technological infrastructure during an earnings call.
Amazon CEO Andy Jassy said “The increase bumps here are really driven by generative AI. It is a really unusually large, maybe once-in-a-lifetime type of opportunity, he said, noting that shareholders will feel good about this long term, that we’re aggressively pursuing it.”
With sales in the segment growing 19% year-over-year to reach $14.3 billion for the quarter, advertising emerged as another key highlight in Amazon’s report. This growth outpaced the performance of Amazon’s core retail business.
Furthermore, reflecting the company’s ongoing emphasis on efficiency and cost-reduction efforts, Amazon’s operating income surged 56% year-over-year to $17.4 billion in the third quarter. CEO Andy Jassy has been dedicated to cutting expenses across the business, including laying off over 27,000 employees since early 2022. Amazon has also continued restructuring its teams throughout this year.