Amazon Stock Rises Sharply on Third-Quarter Earnings Beat and Updated Guidance
Amazon shares rose 12percent on Friday after the tech giant announced impressive third-quarter results that surpassed expectations across all of its key categories and raising its investment outlook to meet the increasing demands for artificial intelligence (AI) solutions.
Cloud Sets the Standard
Amazon Web Services (AWS) was once again the most powerful growth driver for the company. AWS' cloud division reported an increase of 20% over the previous year in revenue. It topped $33 billion. This was well over analyst expectations. AWS also made $11.4 billion of operating revenue which is roughly two-thirds of Amazon's overall operating profit.
This performance is a testament to Amazon's status as a key element for Amazon's model of business in spite of increasing competitors from rivals in the tech industry like Google or Microsoft.
Retail and advertising continue to Expand
Amazon's digital marketing division has also produced impressive results and revenue increased by 24 percent in the range of $17.7 billion. Amazon revenue growth 13% over the course of the year at $180.17 billion, which was more than the $177.8 billion that analysts had forecast according to LSEG information. Earnings per share were at $1.95 much higher than the $1.57 average estimate.
Researchers from Pivotal Research have praised Amazon's performance and noted, "Amazon has a deep moat around their core business powered by unparalleled size." The company suggests buying spending guidance, said Amazon continues to demonstrate "healthy organic growth prospects" throughout their high-margin AWS division as well as its growing advertising segment.
Competitive Cloud Market
Prior to the earnings announcement investors were keeping an eye to observe how AWS could perform against the growing rivalry against Google Cloud and Microsoft Azure. Google Cloud's cloud business saw 34% growth during the same period, and Amazon stock surge 40% and highlighted the ongoing battle among the major cloud providers to take advantage of the enterprise AI demand.
A Bright Spending Outlook
With Amazon earnings announcement, Amazon announced an increase in its capital expenditure forecast, highlighting its determination to expand AI and the cloud technology. Amazon now anticipates that it will invest $125 billion by 2025, which is up from the previous estimate of $118 billion.
