AWS Earnings Beat: Cloud Demand Remains Strong

AWS Poised for Strongest Growth in Three Years

Amazon Web Services (AWS), Amazon’s cloud infrastructure service, is projected to experience its most substantial growth in three years. This surge is largely attributed to the unprecedented demand for computing resources from the rapidly expanding AI industry.

Financial Performance and Growth

AWS has demonstrated a 20% year-over-year increase in growth. Through the first nine months of the year, the company reported $33.1 billion in sales, as detailed in Amazon’s third-quarter earnings release on Thursday.

Operating income for AWS rose to $11.4 billion in Q3, a notable increase compared to the $10.4 billion recorded during the same period in 2024.

Executive Commentary

“AWS is growing at a rate not observed since 2022, with a re-acceleration to 20.2% year-over-year,” stated Andy Jassy, President and CEO of Amazon, during the earnings announcement.

He further elaborated, “We are witnessing robust demand in both AI and core infrastructure, and our focus remains on accelerating capacity expansion—having added over 3.8 gigawatts in the last 12 months.”

Expansion of Infrastructure

During the quarter, AWS successfully launched a new infrastructure region in New Zealand. Additionally, three further regions are currently in development.

Strategic Partnerships

AWS secured several significant new contracts in Q3, spanning diverse industries. Notable partnerships within the AI sector were also established.

In July, a collaboration with Perplexity led to the launch of the AI browser company’s enterprise-level product. Furthermore, AWS partnered with Cursor during the third quarter.

Competitive Landscape

The substantial infrastructure requirements of AI are also benefiting AWS’s competitors. Reports indicate that OpenAI and Oracle entered into a substantial $300 billion cloud compute agreement, scheduled to commence in 2027.

This agreement includes a commitment from OpenAI to pay Oracle $30 billion annually for data center services. Recently, Google and Anthropic announced a cloud deal valued at tens of billions of dollars.

Market Dynamics and Investment

These large-scale agreements have emerged despite some concerns regarding the future need for cloud infrastructure and the potential for a market bubble. However, cloud providers like AWS are strategically capitalizing on a market where customers are prepared to invest heavily in their services.

“We will continue to aggressively invest in capacity, as we anticipate sustained demand,” Jassy commented regarding investments in AI infrastructure. “The capacity we are adding is being monetized at a rapid pace.”

Restructuring and AI Focus

This positive news follows Amazon’s announcement of a reduction of 14,000 corporate positions, as the company prioritizes increased investment in its AI strategy.