Amazon Beats Wall Street Expectations with Strong Cloud Business Growth | Amazon

Amazon was the last of the “magnificent seven” tech giants to report quarterly results on Thursday, with all eyes once again on cloud computing and signs of a return on major AI investments. Shares of the e-commerce giant rose in after-hours trading.

The company reported revenue of $158.9 billion, versus analyst expectations of $157.2 billion, and earnings per share of $1.43, compared with $1.16 reported by Bloomberg analysts were expected.

Amazon reported $27.5 billion for the last three months, up 19%, in line with analysts' expectations for its cloud computing business.

The pace of growth is faster than the company reported last year, a positive sign for Wall Street. The advertising business also brought in as much revenue as analysts expected. In August, the company reported that its Amazon Web Services division had revenue of $26 billion, compared to $22 billion in the same period in 2023.

A day earlier, Microsoft reported significant growth in its cloud computing division, but this did not satisfy investors. The company's shares fell more than 5% on Thursday. Google reported 33% growth in its cloud business, leading to a slight increase in its share price.

“Investors need to see how the monetization of AI extends to the rest of the technology landscape,” Dan Ives, a Wedbush analyst, said this week. “The next few weeks will be the pivotal point in confirming that the AI ​​use case phase in the enterprise world has now begun.”

Amazon executives previously said its AI business was on track to generate more than $105 billion for the year.

Investors are also watching Amazon's traditional business – online retail – for signs that consumers continue to respond to an upbeat U.S. economic environment.

“Amazon is experiencing strong growth in 2024, with momentum for both its core retail business and its efforts to diversify its portfolio,” said Greg Zakowicz, senior e-commerce expert at Omnisend.

“The cost of living crisis has eased for some consumers this year, freeing up disposable income and allowing Amazon to generate more sales than last year with shopping events like Prime Day or Black Friday,” Zakowicz said.

Investors are also scrutinizing Amazon's efforts to compete with Elon Musk's space-based internet service, known as Project Kuiper, which plans to launch 3,236 satellites into low-Earth orbit and then provide global broadband access.

Industry observers were hoping for growth in Amazon's advertising business. Analysts have warned that a slowdown in ad sales combined with a slower-than-expected rollout of ads on Amazon's Prime Video service could pose risks.