Amazon shares jumped 11% Friday after the company delivered third-quarter results that exceeded Wall Street expectations across nearly every metric and raised its spending forecast to meet soaring demand for artificial intelligence infrastructure. The rally pushed the e-commerce and cloud giant's stock to its highest level this year, easing investor concerns over mounting AI costs that have rattled peers like Meta and Microsoft.
The company reported revenue of $180.17 billion, up 13% from a year earlier and ahead of analyst estimates of $177.8 billion, according to LSEG data. Earnings per share reached $1.95, far above the $1.57 forecast. Amazon Web Services (AWS), its cloud computing arm, remained the company's profit engine, posting 20% growth to $33 billion in sales and generating $11.4 billion in operating income, nearly two-thirds of Amazon's total.
Advertising revenue also surged 24% to $17.7 billion, cementing its role as Amazon's second-largest growth driver after AWS. The strong performance comes as Amazon faces intensifying competition from Google and Microsoft in the cloud sector. Both rivals posted faster cloud growth this quarter-Google's at 34% and Microsoft Azure's at 40%-but Amazon remains the market leader by total share.
"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," CEO Andy Jassy said on Thursday's earnings call.
Amazon also lifted its capital expenditures forecast, saying it now expects to spend $125 billion in 2025, up from $118 billion previously. CFO Brian Olsavsky said spending could increase further in 2026 as the company scales up its data centers and AI investments. By comparison, Alphabet, Meta, and Microsoft also raised their capex guidance but remain below Amazon's levels.
The company projected fourth-quarter revenue of $206 billion to $213 billion, exceeding analysts' median estimate of $208 billion, and operating income between $21 billion and $26 billion. Analysts at Pivotal Research wrote after the report that "Amazon has a deep moat around their core businesses driven by their unmatched scale" and "appears to have numerous healthy organic growth opportunities driven by their high margin AWS cloud segment and areas like advertising."
Despite the upbeat financials, Amazon's expansion has been accompanied by sweeping cost reductions. Earlier this week, the company announced plans to lay off 14,000 corporate employees-part of a broader restructuring to "make the company leaner and less bureaucratic," according to Jassy. He emphasized that the cuts were not "financially driven" or tied to AI investment, saying instead, "It really, it's culture... If you grow as fast as we did for several years... you end up with a lot more layers."
The company ended the quarter with 1.58 million employees, up 2% from a year earlier. Its core online stores unit, which includes the July Prime Day sales event, grew 10% year-over-year, while subscription services and third-party seller revenues also showed solid gains.
