Key Points
- Impressive Q3 results pushing Amazon stock up by over 6% in premarket trading. Amazon reported an adjusted EPS of $1.43, beating expectations of $1.14.
- Quarterly revenue hit $158.9 billion, exceeding analyst estimates. Operating income reached $17.4 billion, above projections.
- AI-related growth within AWS saw “triple-digit” expansion, with AWS sales up 19%. Amazon expects to spend $75 billion on infrastructure this year.
- Amazon’s Q4 revenue guidance was slightly below analyst expectations, with projected revenue of $181.5 billion to $188.5 billion.
Amazon.com (NASDAQ: AMZN) reported impressive third-quarter results on Friday, pushing its stock up by over 6% in premarket trading. The retail and cloud giant exceeded analyst expectations, with strong earnings driven by robust growth in its artificial intelligence (AI) initiatives.
The company reported adjusted earnings per share (EPS) of $1.43, surpassing analysts’ forecast of $1.14. Quarterly revenue also beat estimates, coming in at $158.9 billion versus the expected $157.25 billion—an 11% year-over-year increase. Operating income was another bright spot, totaling $17.4 billion, higher than the anticipated range of $15 billion to $16 billion. Barclays analysts remarked that the results offered significant reassurance for Amazon bulls, especially after previous quarters of declining retail operating margins.
CEO Andy Jassy credited AI as a “once-in-a-lifetime” opportunity, highlighting how Amazon capitalizes on the high demand for generative AI solutions. This surge has spurred companies to invest more in cloud services to support AI applications, which has boosted Amazon’s cloud division, Amazon Web Services (AWS). Jassy shared that AI-related operations within AWS are seeing “triple-digit growth,” AWS sales have jumped by 19% to reach $27.5 billion.
This increase in AI demand has led to a substantial rise in Amazon’s capital expenditures, largely directed toward building data centers and enhancing networking infrastructure. Jassy indicated that Amazon plans to allocate $75 billion to capital investments this year, with even greater spending anticipated next year, reflecting its commitment to expanding its AI capabilities.
Beyond AWS, Amazon is also expanding its AI-powered shopping assistant, Rufus, to more countries and introducing innovative AI-driven tools for sellers and advertisers. This focus on integrating AI aligns with Amazon’s optimistic outlook for the upcoming holiday season, as Jassy expressed confidence in new offerings designed to enhance the customer experience.
Amazon’s North American sales grew by 9% to $95.5 billion, while international sales increased by 12% to $35.9 billion. The company achieved its highest overall operating margin at 11%, with AWS achieving a 38% margin, which is also a record.
Looking forward, Amazon anticipates fourth-quarter revenue in the range of $181.5 billion to $188.5 billion, slightly below the $186.36 billion midpoint expected by analysts. The company forecasts operating income of $16 billion to $20 billion for Q4. Despite this slight variance, Bernstein analysts noted they remain optimistic about Amazon’s fourth-quarter results, citing anticipated growth in AWS and advertising segments.
