Amazon delivered stronger-than-expected quarterly results as the company signaled that its artificial intelligence investment cycle is accelerating, with capital spending set to jump again next year.
In its latest earnings report, Amazon (AMZN) says its revenue of $180.1 billion topped estimates of $177.8 billion, with earnings per share coming in at $1.95 versus expectations of $1.57.
AWS (Amazon Web Services) generated $33 billion in revenue, above analyst forecasts of $32.4 billion.
In its earnings call for the quarter ending September, Amazon CFO Brian Olsavsky says AWS is a big contributor to the firm’s performance.
“AWS revenue increased $2.1 billion quarter over quarter and now has an annualized revenue run rate of $132 billion. AWS operating income was $11.4 billion and reflects our continued growth coupled with our focus on driving efficiencies across the business.”
He notes that the company is building aggressively to support generative AI workloads across hyperscale infrastructure, with expansion weighing on margins as depreciation ramps.
“We are expanding our data center footprint largely to accommodate Gen AI, and to the extent those assets were placed into service, the related depreciation does impact our margins. As we’ve long said, we expect AWS operating margins to fluctuate over time, driven in part by the level of investments we’re making at any point in time.”
Capital spending surged this year, with Amazon committing historic levels of investment to fuel cloud and AI expansion. Olsavsky says its capital allocation is anchored in generative AI demand, custom silicon development and network buildout across regions. He also sees another year of elevated capital expenditure (CapEx) as Amazon’s AI roadmap accelerates.
“Looking ahead, we expect our full-year cash CapEx to be approximately $125 billion in 2025, and we expect that amount will increase in 2026.”
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