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Amazon shares experienced a significant surge Friday morning following a robust third-quarter earnings report that has reignited investor confidence, particularly in its cloud computing arm, Amazon Web Services (AWS). The stock climbed to an intraday high exceeding $250, setting the stage for potentially a new all-time closing high above $242.
The catalyst for this market enthusiasm was AWS, the company’s substantial profit driver, which reported a 20% year-over-year revenue increase to $33 billion. This performance surpassed analyst expectations of 18% growth and marked AWS’s return to growth rates above 20% since 2022.
“It was a ‘show of major force’ from CEO Andy Jassy,” said CNBC’s Jim Cramer, reacting to the earnings call. “If you go back to the last quarter, … he was pondering. It sounded like maybe he wasn’t sure of things. This time, he comes out of the tunnel, and he’s just jacked.”
AWS is not just about raw revenue numbers; its performance is indicative of Amazon’s broader strategic positioning in the burgeoning AI landscape. The renewed growth in AWS suggests that Amazon is successfully capitalizing on increased demand for cloud infrastructure to support AI workloads. This comes at a crucial time, as companies across various sectors are aggressively investing in AI initiatives, driving heightened demand for scalable and reliable cloud solutions.
For months, concerns had lingered among investors regarding AWS potentially losing ground to its competitors in the cloud space, specifically Microsoft Azure and Google Cloud. While both Azure and Google Cloud have demonstrated impressive growth percentages, AWS’s sheer scale provides it with a formidable advantage. Alphabet’s Google Cloud revenue climbed 34% to $15.16 billion, and Azure’s growth registered at 40%.
As Cramer noted, Amazon’s Q3 performance effectively addresses those concerns. “This was a quarter where [Jassy] just said, ‘Listen bears, listen skeptics, we are doing so much better than everybody, including by the way Microsoft.'”
The key differentiator for AWS lies in its comprehensive ecosystem and proven track record of supporting mission-critical applications. While Azure and Google Cloud are aggressively expanding their AI-focused services, AWS has a deeper bench of mature cloud offerings essential for enterprises undergoing digital transformation.
Looking forward, Jassy emphasized that AWS growth exhibits strong momentum. The company’s cloud backlog soared to $200 billion by the third quarter, even excluding upcoming deals in October. This robust backlog underscores the sustained and growing demand for AWS’s cloud services, signaling AWS’s sustained market leadership.
To meet this accelerating demand, Amazon is strategically increasing its capital expenditure. Total capital expenditures reached $89.9 billion YTD, and Amazon CFO Brian Olsavsky projects full-year capex to reach approximately $125 billion in 2025 and to increase again in 2026. This increased investment, particularly in AI infrastructure, positions AWS to capitalize on future AI workloads, which are expected to drive a significant portion of cloud spending in the coming years.
While increased capital expenditure for AI development is a concern for some tech giants, Amazon’s share surge suggests a vote of confidence in the company’s strategic investments to secure its advantage in the AI-driven cloud market.
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Original article, Author: Tobias. If you wish to reprint this article, please indicate the source:https://aicnbc.com/12021.html
