Amazon.com Inc. reported strong results that showed a company humming on all cylinders, a testament to its efforts to cut and reallocate costs and put the cloud computing and e-commerce giant on sounder footing.
The Amazon Web Services cloud division, which suffered record low sales growth last year, continued to regain momentum during the third quarter. The online retail operation, which sputtered coming out of the pandemic, grew unit sales by double digits. So did revenue at Amazon’s fast-growing advertising business.
Total third-quarter revenue increased 11% to $158.9 billion, the company said Thursday in a statement, exceeding estimates. Operating profit was $17.4 billion, demolishing the average estimate of $14.7 billion.
“Amazon beat expectations in Q3 on the strength of the three pillars of its business: e-commerce, advertising and cloud services,” said Sky Canaves, an analyst at Emarketer.
Amazon shares rose about 6% in premarket trading on Friday after closing Thursday at $186.40 in New York. The stock has increased 23% this year.
The results show the fruits of Chief Executive Officer Andy Jassy’s years-long push to cut costs and streamline Amazon’s logistics operation. That has given him room to spend heavily on the new data centers required for the boom in demand for artificial intelligence services. Speaking to analysts on a conference call after the results, Chief Financial Officer Brian Olsavsky said Amazon expects to devote a whopping $75 billion to capital expenditures in 2024, the majority of which will go toward technology infrastructure. Jassy said he expected the company to spend even more next year.
The CEO called generative AI “a really unusually large, maybe once-in-a-lifetime type of opportunity. And I think our customers, the business, and our shareholders will feel good about this long term — that we’re aggressively pursuing it.”
Cloud unit revenue jumped 19% to $27.5 billion in the third quarter, in line with estimates. Operating income generated by the unit was $10.4 billion, exceeding analysts’ average projection of $9.12 billion.
