AWS Powers Amazon's Strong Q3 Performance with 20% Growth Amid Intensifying AI Cloud Competition

AWS exceeds Wall Street's expectations as demand for cloud infra remains high | TechCrunch

Amazon's cloud infrastructure service, Amazon Web Services (AWS), is on track to record its strongest year of growth in three years, fueled by the AI industry's unprecedented demand for computing power. AWS is growing 20% year-over-year and ended the third quarter with $33.1 billion in sales through the first nine months of the year, Amazon announced in its third-quarter earnings release on Thursday. The business segment's operating income increased to $11.4 billion in Q3, up from $10.4 billion at the same point in 2024. "AWS is growing at a pace we haven't seen since 2022, re-accelerating to 20.2% YoY," Andy Jassy, the president and CEO of Amazon said in the company's earnings announcement. "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." AWS launched an infrastructure region in New Zealand during the quarter and has three more regions in the pipeline. The cloud infrastructure provider also secured several new deals in Q3 across a variety of industries including a few notable names in the AI market. In July, AWS partnered with Perplexity to launch the AI browser company's enterprise product. AWS also partnered with Cursor during the third quarter. The intense infrastructure demands of AI have also been a boon to AWS's competitors. OpenAI and Oracle allegedly inked a massive $300 billion cloud compute deal in September that will start in 2027. The pair also made a deal for OpenAI to pay Oracle $30 billion a year for data center services. Last week, Google and Anthropic announced a cloud deal worth tens of billions of dollars. These huge deals come despite skepticism of how much cloud infrastructure will actually be needed in the future and if the industry is heading into bubble territory. However, it does makes sense for cloud companies like AWS to take advantage of a market where customers are willing to pay big sums for their services. "You're going to see us continue to be very aggressive in investing capacity because we see the demand," Jassy said about investing in AI infrastructure. "As fast as we're adding capacity right now, we're monetizing it." This news comes two days after Amazon announced it was slashing 14,000 corporate jobs, as it looks to invest more in its AI strategy.

Amazon earnings primer: Cloud dominance in focus after massive outage as rivals gain ground

Andy Jassy, CEO of Amazon, speaks during an unveiling event in New York on Feb. 26, 2025. Amazon is slated to post results for the third quarter after the closing bell Thursday. Here's what analysts polled by LSEG are looking for: Wall Street is also looking at other key revenue numbers: AWS growth will be a major focus for investors once again, as the company faces intensifying pressure from cloud competitors Google and Microsoft, which also reported quarterly results this week. Revenue at AWS is projected to expand 18.1% year over year, which is about the same growth rate as the second quarter. Google's cloud revenue accelerated 34% during the third quarter, while Microsoft Azure recorded growth of 40%. AWS stumbled last week during an extended outage that lasted more than 15 hours, taking down numerous websites as a result. Microsoft experienced outages in its Azure cloud and 365 services on Wednesday, hours before its scheduled earnings release. The Amazon unit is also battling the perception that it's missing out on a flurry of highly lucrative artificial intelligence deals for cloud services. Anthropic and Google deepened their cloud partnership last week in a deal worth tens of billions of dollars, while Meta has inked hefty cloud deals with Google and Oracle in recent months. Amazon on Wednesday opened its $11 billion AI data center called Project Rainier, which was first announced last December and is intended to train and run models from Claude chatbot creator Anthropic. Amazon, which has invested $8 billion in Anthropic, said the startup will use 1 million of its custom Trainium2 chips by the end of 2025. During last quarter's earnings conference call, investors grilled Amazon CEO Andy Jassy on AWS growth and AI competition. Jassy reiterated AWS has a "pretty significant" leadership position in cloud market share, while noting that it's still "early" days in the AI industry that remains "very top heavy" with a "small number of very large frontier models."

Amazon exceeds expectations thanks to sustained growth at AWS, despite increased competition.

On Thursday Amazon announced a 20% increase in revenue for its AWS cloud division in Q3, reaching $33bn, above the $32.42bn anticipated by analysts. This performance confirms AWS's central role in the group's growth, despite increasing competitive pressure from Microsoft Azure (+40%) and Alphabet with its Google Cloud (+34%), which are gradually closing the gap with the industry leader. This announcement comes shortly after a major AWS outage that caused service interruptions for more than 15 hours. Amazon is trying to reassure its customers and consolidate its position in cloud infrastructure for artificial intelligence, a rapidly growing segment. The group recently inaugurated Project Rainier, an $11bn data center dedicated to AI, where models from Anthropic, a start-up in which Amazon has invested $8bn, will be run. Anthropic plans to use up to 1 million Trainium2 chips by the end of 2025. Faced with a proliferation of cloud contracts in AI, notably those signed by Meta with Google and Oracle, Amazon is seeking to demonstrate its capacity for innovation and its strategic commitment. Although its competitors are gaining ground, AWS continues to post solid growth, supported by its investments in AI and its customized infrastructure, key elements in maintaining its dominant position in a rapidly changing market. Furthermore, this publication marks the strongest growth rate in AWS revenue in three years, news that propelled Amazon's stock up nearly 10% in extended trading.