Key Takeaways
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- Revenue $180B (+13% YoY) and net income $21.2B (+39% YoY); shares +~10% after-hours.
- AWS grew 20% YoY, fastest since 2022; management says demand outstrips capacity despite a higher base.
- Q4 guide: revenue $206–213B; operating income $21–26B.
- Capex ~$90B YTD, ~$125B for 2025e; data center capacity doubled since 2022 and expected to double again by end-2027.
What Happened?
Amazon posted stronger-than-expected results led by a 20% YoY rebound in AWS, easing fears it lags peers in AI monetization. Company sales rose 13% to $180B with net income up 39% to $21.2B. Guidance points to a solid holiday quarter: revenue of $206–213B and operating profit of $21–26B. Management highlighted capacity constraints as AI demand outpaces buildouts and said Project Rainier is now fully operational. One-time items included a $2.5B FTC Prime settlement and ~$1.8B for 14,000 white-collar job cuts.
Why It Matters?
AWS’s growth inflection confirms AI workloads are scaling across training and inference, supporting multi-year cloud revenue visibility. Heavy capex and power procurement signal a sustained compute buildout that can expand AWS’s advantage and attach higher-margin AI services. Retail still benefits from faster delivery density and automation, improving unit economics. Risks include power and chip bottlenecks, elevated capex weighing on near-term FCF, and operational resilience after a recent East Coast data-center outage. Tariff exposure appears manageable with limited pass-through to marketplace prices.
What’s Next?
Watch AWS backlog, AI service adoption, and margin trajectory as new capacity lands. Track capex pacing, power deals, and timeline to the next data-center doubling by 2027. In Retail, monitor same-day penetration, rural warehouse ROI, and automation gains. Execution on headcount resets and cost discipline will frame 2026 operating leverage. Any major outage incidents or supply constraints could temper the current multiple expansion.
