Amazon earnings beat estimates thanks to cloud services

Amazon posted sales of $180.2bn (£137.1bn) in the quarter, a 13% rise on the same three months in 2024. Partially driving the rise was strong trading by its cloud business AWS, where revenues jumped by a fifth.

This was the fastest growth in AWS sales since 2022. The global outage of its services last week, which took down some of the world’s biggest platforms, demonstrated its importance to the internet.

Operating income was flat year-over-year at $17.4bn (£13.3bn). However, the company said that it would have grown without a $2.5bn charge from the Federal Trade Commission over allegations it duped members into signing up to its premium prime services.

The company said it also estimated $1.8bn in severance costs due to planned role eliminations. Amazon announced earlier this week that it was looking to cut 14,000 roles in its corporate workforce in part to seize the opportunity provided by Generative AI.

Sales in its North America segment grew by 11% year over year, while international sales rose by 14% or 10% excluding foreign currency exchange rate changes.

“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,” said Andy Jassy, President and chief executive.

“In Stores, we continue to realise the benefits of innovating in our fulfilment network, and we’re on track to deliver to Prime members at the fastest speeds ever again this year, expand same-day delivery of perishable groceries to over 2,300 communities by end of year, and double the number of rural communities with access to Amazon’s Same-Day and Next-Day Delivery.”

Amazon says it expects sales to grow by between 10% and 13% in the fourth quarter.

The company remains bullish about the potential of Generative AI and AI more broadly, despite warnings, including from the Bank of England, of the potential for the AI boom to turn out to be a bubble. Jerome Powell, chair of the US Federal Reserve, told reporters yesterday that the current situation was “really a different thing” from the dotcom bubble seen at the turn of the millennium, as the tech firms gaining higher valuations due to AI actually have earnings.

Amazon’s cloud rivals Google and Microsoft also reported jumps in revenue this week.