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Amazon Shares Surge as AWS Cloud Unit Fuels Strong Growth

  • tech360.tv
  • 1 day ago
  • 2 min read

Amazon shares surged over 11% after its cloud unit showed robust growth, easing concerns that the tech giant was lagging behind rivals in the artificial intelligence (AI) race. This strong performance, coupled with a bullish sales outlook, helped Amazon's stock rebound.


Amazon building with logo on a gray facade, featuring a yellow stripe. The sky is partly cloudy, creating a neutral, corporate feel.
Credit: AMAZON

Revenue at Amazon Web Services (AWS), the company's hub for recent AI investments, increased by 20% in the third quarter. AWS generated USD 33 billion in cloud revenue, which is more than double Google's USD 15.16 billion.


While Microsoft Azure's revenue rose by 40% and Google Cloud's by 34%, AWS’s substantial scale amplifies the impact of its growth. Wall Street welcomed the AWS comeback, with analysts noting a potential turning point for Amazon.


Jed Ellerbroek, a portfolio manager at Argent Capital, stated, "There was definitely concern about AWS losing market share to Microsoft Azure and Google Cloud... But now AWS is aboard the train as well and they're seeing a big revenue increase." Ellerbroek added that investors had anticipated an AWS boost later, but it arrived this quarter.


Amazon Chief Executive Officer Andy Jassy noted that AWS is "growing at a pace we haven't seen since 2022," driven by strong demand for AI and core infrastructure. Amazon projects an increase in capital expenditures for the coming year to meet this growing demand.


Smiling worker in an orange vest holding an Amazon box in a warehouse. Stacks of boxes, yellow machinery, and a conveyer belt in background.
Credit: AMAZON

Amazon's forward 12-month price-to-earnings ratio is 29.63, surpassing Alphabet's 25.98 but trailing Microsoft's 31.72. The company's retail and advertising businesses also delivered strong performances during the period.


Retail results were strong, with 11% year-over-year growth. Ellerbroek highlighted this, asking, "Name me another big retailer in America growing that fast - they don't exist."


The advertising segment, though a smaller part of Amazon's overall operations, is expanding rapidly. Sales in this business jumped 24% to USD 17.7 billion, attributed to efforts to expand ad placements across Echo devices, grocery carts, and sponsored listings.


At least 23 brokerages subsequently increased their price targets for Amazon's stock following these results. Before this surge, Amazon shares had risen only 1.6% so far this year, placing it as the weakest performer among the "Magnificent Seven" tech giants due to market share worries and limited AI updates.


The recent gains have helped Amazon overtake Tesla and Apple in year-to-date stock performance. Tesla has climbed about 11% this year, including recent moves, while Apple is up roughly 8%.

  • Amazon shares surged over 11% after strong growth in its AWS cloud unit.

  • AWS revenue increased by 20% to USD 33 billion, demonstrating significant scale.

  • Amazon Chief Executive Officer Andy Jassy cited strong demand for AI and core infrastructure for AWS's growth.


Source: REUTERS

 
 
 

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