Amazon AWS Triggers Global Internet Outage — So Why Did Its Stock Rise?

TradingKey - A sudden outage at Amazon’s AWS cloud service not only disrupted operations across one of the world’s largest e-commerce platforms but, due to its position as the globe’s top cloud provider, brought down “half the internet.” Despite this massive disruption, Amazon’s stock rose on the day — a reflection of its unshakable industry dominance and long-term growth potential.

On Monday, October 20, Amazon Web Services (AWS) suffered a widespread multi-hour outage after a core database, Amazon DynamoDB, failed in its US-East-1 data center — impacting services globally.

Customers relying on AWS, including Coinbase, Robinhood, Snapchat, Zoom, Roblox, and Duolingo, were affected. The outage spanned fintech platforms, gaming, entertainment, and even impacted critical government systems such as Scotland’s Bank of Scotland and the UK’s HMRC (Her Majesty’s Revenue and Customs).

Industry experts described the impact of what is considered one of AWS’s most severe outages in recent years as rendering “half the internet unusable.” 

According to Downdetector, over 4 million users reported issues stemming from the failure, with services at at least 1,000 companies disrupted.

Contrary to the broad negative impact on global networks, Amazon’s stock climbed throughout Monday, closing up 1.61% at $216.48. Year-to-date, Amazon shares are still down over 1%, making it the weakest performer among the Magnificent Seven.

The Fragility of Global Connectivity

Amazon AWS holds about one-third of the global cloud market, followed by Microsoft Azure and Google Cloud. The US-East-1 site is AWS’s oldest and largest web service region, serving as the default zone for many AWS services.

Reuters noted this was the third major outage in at least five years at the Northern Virginia data center, and the largest global internet disruption since last year’s Crowdstrike incident, highlighting the fragility of interconnected technology.

The Wall Street Journal also pointed out that Amazon’s outage serves as a stark reminder of how vulnerable global connectivity has become. In recent years, even seemingly minor software updates have triggered global network failures.

Jacob Bourne, analyst at eMarketer, said:

“Even if just briefly, major providers like AWS going down represent vulnerabilities in what have become critical infrastructure for organizations and, in some cases, governments globally. As cloud reliance and workloads expand, these outages could hit industries harder.”

The Value of Multi-Cloud Strategies

Nishanth Sastry, Research Director in the Department of Computer Science at the University of Surrey, noted the root cause: too many large companies rely solely on a single provider.

Some firms mitigate risk by distributing data — replicating it across different servers, sites, and regions — or adopting a “multi-cloud strategy,” using platforms from Microsoft, Google, or smaller providers like DigitalOcean.

For example, commercial real estate firm McKenney’s, which uses multiple cloud platforms, avoided complete service disruption during the outage.

Analysts say the AWS outage will accelerate efforts by many companies to diversify their cloud providers, increasing flexibility in responding to and recovering from outages.

However, cloud diversification is not easy. For some customers, even hosting data outside the U.S. doesn’t eliminate risks — because key functions like identity verification still depend on AWS’s US-East region.

AWS Growth Acceleration Potential

Surprisingly, investors showed little concern over the outage. Some argue that more important than the downtime is whether Amazon’s cloud division can re-accelerate growth — especially given that AWS’s Q2 revenue growth lagged far behind rivals Google and Microsoft.

Bernstein believes Amazon can turn AWS around, forecasting a strong and visible acceleration by year-end.

With Amazon’s third-quarter earnings due at the end of the month, Deutsche Bank said the fate of Amazon’s stock hinges entirely on AWS. Despite ongoing supply constraints, increased capacity from the rollout of Project Rainier, Amazon’s next-generation data center initiative, could push AWS’s quarterly growth rate from 17.5% to 18–19%, paving the way for 20% growth in Q4.

Analysts also highlighted the potential contribution of Anthropic to AWS revenue. Amazon has repeatedly increased its investment in the AI startup, betting on an explosion in enterprise adoption of AI products.

The Financial Times noted the outage might actually prompt businesses to increase spending on cybersecurity — creating clear beneficiaries: cloud and data center providers — including, to some extent, Amazon itself.