Cloud growth accelerates
Amazon's cloud unit AWS grew revenue 39% to $46 billion in the third quarter, according to GeekWire — its fastest pace in nearly five years. AWS now runs at a $184 billion annual revenue run rate and is closing in on Amazon's third-party seller business as the company's second-largest source of sales.
CEO Andy Jassy said he expects the cloud unit to top 40% growth in both 2027 and 2028. He also said there has never been a trillion-dollar revenue business and that Amazon may have two of them in the next 5-10 years.
Profit falls short
Despite the growth, Amazon reported earnings of $1.89 per share, below the $1.97 analysts expected. The company blamed higher interest costs on its growing debt and other losses for eating into profit. Revenue rose 12% to $201.9 billion, just under estimates. Shares fell more than 7% in after-hours trading after closing down 4% in the regular session.
Other segments
- Advertising grew 11% to $19.6 billion, down from 22% a year earlier; Amazon blamed the timing of Prime Day.
- Online stores grew 2% to $68.5 billion.
- Third-party seller services grew 9% to $46.5 billion.
- Subscription services grew 11% to $14 billion, and physical stores grew 2% to $5.7 billion.
Spending and outlook
Amazon expects to spend about $220 billion on capital projects this year. Free cash flow was negative $42.4 billion over the past 12 months, compared with positive $14.8 billion a year earlier, mostly because of its AI investments. For the fourth quarter, Amazon expects revenue of $240 billion to $247 billion and operating income of $28.5 billion to $33.5 billion.
