Amazon’s stock soars on earnings, revenue beat, spending guidance

Amazon shares rose 10.81% on Friday after the company reported overall growth in the third quarter and boosted spending estimates due to demand for artificial intelligence services.

The cloud has been a key driver of revenue and profit growth; Sales at Amazon Web Services exceeded expectations, rising 20% ​​from the previous year to $33 billion.

The unit generated $11.4 billion in operating revenue, accounting for roughly two-thirds of Amazon’s total operating profit.

Revenue from the digital advertising business, another growth engine, increased by 24% to $17.7 billion. Total sales on Amazon rose 13% to $180.17 billion, beating the average analyst estimate of $177.8 billion, according to LSEG. Earnings per share came in at $1.95, beating the average estimate of $1.57.

“Amazon has a deep moat around its core businesses due to their unparalleled scale,” analysts at Pivotal Research wrote in a note following the report.

Analysts who recommend buying the stock said Amazon “appears to have plenty of healthy organic growth opportunities thanks to its high-margin AWS cloud segment and areas like advertising.”

When it comes to earnings, cloud was a key area of ​​concern due to increased competition from Google and Microsoft, which also reported quarterly results this week. Google’s cloud revenue grew 34% in the third quarter, while Microsoft Azure grew 40%.

Amazon’s shares were well behind their megacap peers, up just 1.6% in the year before the report.

While the company remains a leading provider of cloud infrastructure technology, it is struggling with the perception that it is missing out on highly lucrative AI deals for cloud services.

However, when it comes to spending, Amazon is ahead of its competitors.

Amazon raised its capital spending forecast this year, saying it now expects to spend $125 billion in 2025, down from a previous forecast of $118 billion. CFO Brian Olsavsky said that number will likely increase in 2026. Google, Meta and Microsoft also lifted their capex guidance, but they were all below Amazon.

Amazon said it expects sales this quarter to be between $206 billion and $213 billion. The midpoint of its revenue outlook, $209.5 billion, beat estimates of $208 billion, according to LSEG.

While investors cheered Amazon’s results, it’s been a tough week for large segments of the company’s workforce.

Amazon on Tuesday said it would lay off 14,000 corporate employees as part of an effort to make the company leaner and less bureaucratic so it can move faster. More disruptions are expected soon, and Jassy said it’s not “financially driven” or AI-driven, “at least not yet.”

“It’s actually a culture,” Jassy said. “When you grow as fast as we have for several years, the size of the businesses, the number of people, the number of locations, the types of businesses you’re in, you have a lot more people than you ever had before, and you have a lot more layers.”

The company ended the quarter with approximately 1.58 million employees; This figure increased by 2% compared to the same period of the previous year.

Sales at Amazon’s main online store unit grew 10% in the quarter, which included results from July’s Prime Day sales event.

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