Amazon Web Services (AWS) reported a 17.5% year-on-year increase in revenue to $30.9bn during the second quarter of its 2025 financial year, while achieving a 9.6% uptick in profit to $10.2bn.
According to AWS, its Q2 figures mean it is now a $123bn annualised revenue run rate company, with the firm attributing its growth to a slew of agreements it has recently signed with the likes of Airbnb, Pepsi, the London Stock Exchange, NatWest and the Nissan Motor Company.
During its earnings call, transcribed by Seeking Alpha, Amazon CEO Andy Jassy said there are still a lot of enterprises out there that are yet to move to the cloud, and that – combined with its growing portfolio of artificial intelligence (AI) services – will sustain the company’s future growth.
“In the rapidly evolving world of generative AI, AWS continues to build a large, fast-growing, triple-digit year-over-year percentage multibillion-dollar business with more demand than we have supplied for at the moment,” he said. [And] remember that 85% to 90% of worldwide IT spend is still on-premise verses in the cloud. In the next 10 to 15 years, that equation is going to flip, further accelerated by the company’s excitement for leveraging AI.”
Amazon’s chief financial officer, Brian Olsavsky, shed some light during the call on the impact the company’s continued investment in building out the infrastructure underpinning its AI and cloud endeavours is having on AWS’s margins.
During his time on the call, he said the margins for AWS had declined from a record high of 39.5% during Q1 to 32.9% in Q2 due to a mix of factors, including fluctuating foreign exchange rates, increased depreciation expenses and seasonal stock-based, compensation-related expenses.
“The depreciation expense is a result of our growing investments in capital expenditures in AWS,” said Olsavsky. “We expect AWS operating margins to fluctuate over time, driven in part by the level of investments we are making at any point in time. We will continue to invest more capital in chips, datacentres and power to pursue this unusually large opportunity that we have in generative AI.”
Elsewhere on the call, Jassy and Olsavsky were quizzed about the competitive pressure AWS is coming under, with its public cloud rivals, Microsoft and Google, known to be snapping at the company’s heels.
As reported by Computer Weekly, Microsoft Cloud announced its Q4 results this week, reporting 27% revenue growth to $46.7bn, but Jassy played down the significance of its rivals reporting faster growth.
“Year-over-year percentages and growth rates are always a function of the base in which you operate … and we have a meaningfully larger business in the AWS segment than others,” he said.
“When we look at the results over the last number of quarters, there are [times where] we’re growing faster than others and sometimes others are growing faster than us … [but] it’s still a … pretty significant segment leadership position that we have.”
