Amazon shares soar as AI boom fuels stellar growth in AWS cloud unit
Trending Articles- Gold Price Forecast: XAU/USD slumps to near $4,000 on US-China trade progress
- Gold holds gains near $3,950 ahead of Trump-Xi meeting
- Gold declines as traders brace for trade talks, US CPI inflation data
- US CPI headline inflation set to rise 3.1% YoY in September
- Australian Dollar maintains position due to US-China trade optimism
- Bitcoin, cryptos fail to rally as Fed Chair sparks cautious sentiment
Oct 31 (Reuters) - Amazon shares jumped nearly 12% in premarket trade on Friday after strong growth at its cloud unit and a bullish sales outlook eased fears that the tech giant was falling behind rivals in the AI race.
Revenue at Amazon Web Services, the hub of the company's recent AI investments, rose 20% in the third quarter, compared with Microsoft Azure's 40% and Google Cloud's 34%.
However, analysts said the rebound marked a potential turning point for Amazon.
The company's $33 billion in quarterly cloud revenue is more than double of Google's $15.16 billion.
"There was definitely concern about AWS losing market share to Microsoft Azure and Google Cloud," said Jed Ellerbroek, portfolio manager at Argent Capital.
"But now AWS is aboard the train as well and they're seeing a big revenue increase."
The Seattle-based company has relied on strong cloud demand to offset pressures on e-commerce as consumer spending softens amid tariff uncertainty and inflation.
Still, worries over its slower pace in winning major AI deals have weighed on the stock, up just 1.6% this year, making it the worst performer among the "Magnificent Seven."
CEO Andy Jassy said on Thursday AWS is "growing at a pace we haven't seen since 2022," citing strong demand for AI and core infrastructure.
Like other Big Tech firms, Amazon also forecast increased capital spending over the next year.
Amazon's forward 12-month price-to-earnings ratio recently stood at 29.63, surpassing Alphabet's 25.98 but trailing Microsoft's 31.72.
RETAIL, ADS PITCH IN
The company's retail and advertising businesses also delivered strong performances. Retail revenue rose 11% year-over-year, outpacing most large U.S. peers, while advertising sales jumped 24% to $17.7 billion.
"Amazon's retail results were very good. They're growing 11% year over year. Name me another big retailer in America growing that fast - they don't exist," said Jed Ellerbroek of Argent Capital.
The company has been expanding ad placements across Echo devices, grocery carts, and sponsored listings, helping boost margins and diversify revenue.
Most AI and cloud stocks have outperformed the S&P 500 index this year
Read more
* The content presented above, whether from a third party or not, is considered as general advice only. This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.
