Amazon Beats Analysts’ Expectations in Latest Earnings Report

Amazon reported third-quarter revenue of $158.9 billion, an 11% year-over-year increase that beat analysts’ estimates of $157.2 billion. The better-than-expected results were apparently fueled by Amazon’s ad sales as well as cloud services. According to CNBC, Amazon’s shares rose by 6% on Friday after reporting the results.

Amazon’s advertising sales reached $14.3 billion; a 19% surge compared to Q3 2023. Comparatively, Meta’s advertising group rose 18.7%, while advertising revenue at Google grew 15% in the last quarter.

Amazon Web Services (AWS) also grew 19% in the third quarter, coming in at $27.4 billion. In the same period last year, growth clocked in at 12% as sales were slower for the unit as customers cut back on spending.

As far as operating income, the third quarter marked a 56% boost versus last year, hitting just over $17 billion. The number likely reflects Amazon’s aggressive strategy to cut costs, which included eliminating about 27,000 jobs over the last two years.

Amazon expects a strong fourth quarter, with revenue likely falling between $181.5 billion and $188.5 billion. As Amazon’s revenue climbs, so do its capital expenditures.

Amazon Investments

Amazon continues to heavily invest in equipment and technology. In the most recent quarter, the online giant spent $22.62 billion, up from $12.48 billion in the same period last year, to begin upgrading data centers as well as increasing automation. According to Amazon CEO Andy Jassy, capital expenditures next year will likely exceed what was spent in 2024.

To stay ahead of the curve, many of Amazon’s data centers are getting upgrades — namely, Nvidia GPUs will be installed to handle the increasing demands of AI. Investments in this area are crucial for growth as AWS makes up nearly 60% of the company’s profit.

The Amazon app’s AI assistant, Rufus, which became available to all U.S. consumers in September, could boost sales on the retail side. To help shoppers make purchasing decisions, the assistant can answer product questions, compare items, and even recommend products based on customer queries.

With Thanksgiving falling later than usual, a slightly shorter shopping season this year could give Amazon an edge over its competitors. To decrease delivery time and reduce costs, Amazon is installing more robots into its fulfillment network. Consumers, short on time, could utilize Amazon’s fast shipping to get gifts delivered just in the nick of time.