Amazon Web Services Revenue Soars 39% to $45.98 Billion

Amazon Web Services generated $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 average forecast from analysts polled by StreetAccount. The growth rate marks the highest pace for the cloud division since the fourth quarter of 2021, outpacing the roughly 37% expansion recorded in the second quarter.

Profitability also surpassed market expectations. AWS posted $17.77 billion in operating income for the quarter, representing a 55% year-over-year rise. This amount beat the $16.97 billion consensus estimate. The cloud segment now accounts for nearly 23% of Amazon's total revenue, setting a new record for its share of the parent company's top line.

Amazon CEO Andy Jassy cited strong performance in foundational services during a conference call with analysts. He stated, "Our core compute and storage revenue grew at their fastest rates in several years." The company remains the largest cloud provider globally by revenue, though competitors are closing the gap. Alphabet reported that its Google Cloud business more than doubled in the third quarter. Microsoft disclosed that its Azure division is now 72% the size of AWS, up from 58% two years ago.

Intense competition is driving massive capital investment in data center capacity to handle artificial intelligence workloads. AWS announced plans to expand its lineup of Nvidia graphics processing units during the quarter. The company also acquired data analysis startup DuckLabs and secured new agreements with Meta and OpenAI.

Jassy outlined an ambitious financial trajectory for the division. He projected that AWS could grow at a rate exceeding 40% in both 2027 and 2028. He further predicted the unit will become a trillion-dollar revenue business within the next five to ten years. To support this expansion, Amazon plans to sell its in-house Trainium AI chips to customers outside the AWS platform.

Jassy noted that customer demand for Trainium hardware has been strong enough to prompt a change in sales strategy. He said the company intends to make these chips available externally by late 2027. This move mirrors a recent strategy by Google, which began offering its tensor processing units outside its own cloud facilities.

AWS holds the longest track record among the major cloud platforms. Its initial services launched in 2006, preceding both Microsoft Azure and Google Cloud Platform.