AWS Revenue Surges 39% to $46 Billion

Amazon Web Services reported $45.98 billion in revenue for the third quarter, a 39% increase from the same period last year. This figure exceeded the $45.29 billion consensus estimate polled by StreetAccount. The growth rate represents the steepest expansion for the unit since the fourth quarter of 2021, surpassing the approximately 37% growth recorded in the prior quarter.

Profitability also exceeded expectations. AWS generated $17.77 billion in operating income, a 55% year-over-year jump that beat the $16.97 billion analyst forecast. The cloud division now accounts for nearly 23% of Amazon's total revenue, setting a new record for the segment's share of the company's overall business.

On a conference call with analysts, Amazon CEO Andy Jassy noted that core compute and storage revenue grew at their fastest rates in several years. He cited the continued pace of innovation and new AI functionality as drivers for this performance. Jassy stated that enterprises are increasingly choosing AWS for both core and AI workloads, supported by the company's annual capacity additions.

The company is not acting alone in the cloud market. Alphabet announced on Wednesday that its Google Cloud business, which includes infrastructure and Google Workspace subscriptions, more than doubled in the third quarter. Microsoft also reported on Wednesday, publishing its first earnings report that specified Azure revenue in dollars. Azure now measures 72% the size of AWS, up from 58% two years ago.

Major cloud providers are racing to build data centers to meet strong demand for artificial intelligence. During the quarter, AWS announced plans to broaden its lineup of Nvidia graphics processing units designed for AI workloads. The company also disclosed the acquisition of data analysis startup DuckLabs and signed new deals with Meta and OpenAI.

Amazon plans to shift how it sells its AI hardware. Following Google's strategy of offering tensor processing units outside its own facilities, Amazon intends to make its Trainium chips available to customers beyond AWS. Jassy said that strong demand for Trainium, which is used to train models, has led customers to request access outside the cloud platform. The company plans to implement this change late in 2027.

Jassy projected that AWS can grow north of 40% in both 2027 and 2028. He expressed confidence that the division will become a trillion-dollar revenue business within the next five to 10 years. AWS remains the oldest of the major cloud platforms, having launched its first services in 2006, ahead of Azure and Google Cloud Platform.