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

Amazon shares soared 10.81% on Friday after the company reported an across-the-board beat for the third quarter and boosted its forecast for spending due to demand for artificial intelligence services.

Cloud was a major driver of revenue and profit growth, with sales at Amazon Web Services climbing 20% from a year earlier to $33 billion, topping expectations.

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

Revenue in the digital advertising business, another growth engine, jumped 24% to $17.7 billion. Total sales at Amazon climbed 13% to $180.17 billion, topping the average analyst estimate of $177.8 billion, according to LSEG. Earnings per share came in at $1.95, exceeding the $1.57 average estimate.

“Amazon has a deep moat around their core businesses driven by their unmatched scale,” analysts at Pivotal Research wrote in a note after the report.

The analysts, who recommend buying the stock, said Amazon “appears to have numerous healthy organic growth opportunities driven by their high margin AWS cloud segment” and areas like advertising.

Coming into earnings, cloud was an area of key concern due to increased competition from Google and Microsoft, which also reported quarterly results this week. Google’s cloud revenue increased 34% during the third quarter, while Microsoft Azure recorded growth of 40%.

Amazon’s stock was up just 1.6% for the year ahead of the report, well behind its megacap peers.

While the company remains the leading provider of cloud infrastructure technology, it’s been battling the perception that it’s missing out on a flurry of highly lucrative AI deals for cloud services.

But when it comes to spending, Amazon is ahead of its rivals.

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

For the current quarter, Amazon said it expects sales to be $206 billion to $213 billion. The midpoint of the revenue outlook, $209.5 billion, topped estimates of $208 billion, according to LSEG.

While investors are cheering Amazon’s results, it’s been a tough week for a wide swath of the company’s workforce.

On Tuesday, Amazon said it will lay off 14,000 corporate employees, as part of a push to make the company leaner and less bureaucratic, so it can move faster. More cuts are expected soon, and Jassy said it’s not “financially driven” or due to AI, “right now, at least.”

“It really, it’s culture,” Jassy said. “If you grow as fast as we did for several years, you know, the size of the businesses, the number of people, the number of locations, the types of businesses you’re in, you end up with a lot more people than what you had before, and you end up with a lot more layers.”

The company finished the quarter with about 1.58 million employees, which was a 2% increase from the year-ago period.

Sales in Amazon’s core online stores unit posted growth of 10% during the quarter, which includes the results of its Prime Day discount event in July.

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