Amazon beat estimates for its third-quarter earnings with $180.2 billion in revenue, up 13% year-over-year, and earnings per share of $1.95, up from $1.43 in the year-ago period.
- Net income was $21.2 billion, up from $15.3 billion last year.
- Wall Street expected $177.7 billion in revenue, and earnings per share of $1.56.
Amazon shares were up more than 11% in after-hours trading. Growth in the company’s stock has lagged behind rivals Microsoft and Google this year.
Investors were likely pleased with a re-acceleration in Amazon’s closely watched cloud computing unit, which reported $33 billion in sales, up 20% year-over-year and topping analyst estimates. In a press release, Amazon CEO Andy Jassy said AWS is “growing at a pace we haven’t seen since 2022.”
“We continue to see strong demand in AI and core infrastructure, and we’ve been focused on accelerating capacity — adding more than 3.8 gigawatts in the past 12 months,” Jassy added.
The cloud growth should help Amazon counter the Wall Street narrative that its cloud business is falling behind Microsoft and Google in pursuing the AI opportunity.
- Amazon and other cloud giants are pouring billions of dollars into capital expenditures to support AI initiatives. Amazon said earlier this year it expects to increase capital expenditures to more than $100 billion in 2025.
- The company makes most of its operating profits from AWS — $11.4 billion in the third quarter, more than half Amazon’s total operating income.
- AWS was hit with a major outage last week that took down several major sites and services. It blamed an internal issue within the cloud giant’s infrastructure.
Amazon’s overall operating income reached $17.4 billion in the third quarter — flat compared to a year ago. The company had forecast operating income of $15.5 billion to $20.5 billion.
The company said its Q3 operating income reflected two special charges:
- A $2.5 billion charge related to a recent settlement with the Federal Trade Commission related to Prime memberships.
- About $1.8 billion in estimated severance costs related to its massive 14,000 corporate layoff announced earlier this week.
The workforce reduction comes amid an efficiency push at Amazon. Jassy has cited a need to reduce bureaucracy and become more efficient in the new era of artificial intelligence.
- Reuters reported this week that the number of layoffs could ultimately total as many as 30,000 people, which is still a possibility as the cutbacks continue into next year.
- Jassy told employees in a company-wide memo earlier this year that Amazon’s corporate workforce will shrink in the coming years as generative AI takes hold.
Online store sales were $67.4 billion, up 10%.
- The revenue includes sales from the company’s annual Prime Day sales event from July 8-11.
- Analysts are watching for impact from tariffs on the company’s retail business, which still makes up the largest portion of its overall revenue.
- In its Q1 earnings report in April, Amazon added “tariff and trade policies” to a list of factors that create uncertainty in its results, joining existing risks such as inflation, interest rates, and regional labor market constraints.
Here are more details from the second quarter earnings report:
Advertising: The company’s ad business brought in $17.7 billion in revenue in the quarter, up 24% from the year-ago period, topping estimates. Advertising, along with AWS, is one of Amazon’s most robust businesses.
Third-party seller services: Revenue from third-party seller services was up 12% to $42.5 billion.
Shipping costs: Amazon spent $25.4 billion on shipping in Q3, up 8%.
Physical stores: The category, which includes Whole Foods and other Amazon grocery stores, posted revenue of $5.6 billion, up 7%.
Headcount: Amazon employs 1.57 million people, up 2% year-over-year. That figure does not include seasonal and contract workers.
Prime: Subscription services revenue, which includes Prime memberships, came in at $12.6 billion, up 11%.
Guidance: The company forecasts Q4 sales between $206 billion and $213 billion. Operating income is expected to range between $21 billion and $26 billion, compared with $21.2 billion in the year-ago quarter.
