Why Amazon Stock Surged to an All-Time High Today
Key Points
Amazon's cloud business is booming.
Management is spending aggressively to capture a larger share of the fast-growing artificial intelligence market.
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Shares of Amazon (NASDAQ: AMZN) jumped nearly 10% on Friday after the e-commerce juggernaut said growth was accelerating in its lucrative cloud computing business.
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Cloud gains are fueling Amazon's profit growth
Amazon's third-quarter sales grew by 13% to $180 billion. The company's cloud infrastructure platform, Amazon Web Services (AWS), saw its sales rise by 20% to $33 billion, a notable increase from the 17.5% growth it delivered in the second quarter. The gains bolstered investors' confidence that Amazon could maintain its perch atop the cloud industry.
"We continue to see strong demand in AI and core infrastructure, and we've been focused on accelerating capacity," CEO Andy Jassy said.
At the same time, Amazon is working to cut costs to bolster its profitability. The company is reportedly planning to slash as many as 30,000 jobs across multiple business segments in the coming months.
Amazon is also investing aggressively in robotics and other automation technologies to improve the efficiency of its e-commerce operations. The online retail giant has already deployed over 1 million robots in its warehouses.
These efforts are bearing fruit. Amazon's operating cash flow has swelled by 16% to more than $130 billion over the trailing 12 months.
The AI revolution is just getting started
Amazon plans to use much of this cash to strengthen its position within the AI race. "Looking ahead, we expect our full-year [capital expenditures] to be approximately $125 billion in 2025, and we expect that amount will increase in 2026," CFO Brian Olsavsky said during a conference call with analysts.
Jassy, in turn, expects these investments to fuel Amazon's expansion for many years to come. "We continue to see strong momentum and growth across Amazon as AI drives meaningful improvements in every corner of our business," he said.
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Joe Tenebruso has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
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