AWS Revenue Jumps 39% as Amazon's Cloud Unit Hits Record Share of Profit
The cloud division beat Wall Street expectations with its fastest growth of the year, even as rivals Google and Microsoft post even steeper gains.
Amazon's cloud computing arm just posted its strongest quarter in a while, and it's making the AI spending race look like it's paying off.
AWS brought in $45.98 billion in revenue during the third quarter, up 39% year over year, according to Amazon's statement. That beat the $45.29 billion that analysts polled by StreetAccount had expected, and it's an acceleration from the roughly 37% growth AWS posted in the second quarter.
The profit numbers looked even better. AWS generated $17.77 billion in operating income, up 55% from a year earlier and well ahead of the $16.97 billion consensus estimate. The unit now makes up almost 23% of Amazon's overall business, a record for the company.
That's notable because AWS has long been Amazon's profit engine even though it's a smaller slice of revenue than the retail business. A widening margin on accelerating growth means the cloud unit isn't just getting bigger, it's getting more efficient at converting that growth into cash.
The AI arms race intensifies
Amazon still holds the top spot among cloud providers by revenue, but the competitive gap is narrowing in percentage terms. Alphabet said this week that Google Cloud, which includes its infrastructure business and Workspace subscriptions, more than doubled in the third quarter. Microsoft's cloud business has also been accelerating.
All three companies are pouring money into data centers to keep up with demand for AI computing power, and AWS's quarter reflects that buildout. The company announced plans during the quarter to expand its lineup of Nvidia graphics processing units, the chips that power most large-scale AI training and inference work.
AWS also moved to shore up its AI business through deals and acquisitions. It bought DuckLabs, a startup focused on data analysis, and signed agreements with both Meta and OpenAI, according to the statement. Those partnerships put AWS squarely in business with two of the most prominent names in AI development, at a moment when every major cloud provider is trying to lock in the companies building and running large AI models.
Why the margin matters
The operating income jump is arguably the more interesting number here. Revenue growth shows demand is strong, but a 55% jump in operating income on 39% revenue growth means AWS is also getting more profitable as it scales. That's a signal investors watch closely, especially given how much capital Amazon and its rivals are sinking into data center construction and chip purchases to meet AI demand.
For a business now approaching a quarter of Amazon's total footprint, that combination of accelerating growth and expanding margin matters well beyond the cloud division itself. It's increasingly the number investors look at to judge whether Amazon's AI infrastructure bet is translating into actual profit, not just spending.
The next question is whether AWS can keep pace with Google Cloud's doubling growth rate, or whether the AI infrastructure race settles into a pattern where Amazon's advantage in overall scale outweighs its rivals' faster percentage gains. Either way, the fight over who controls the computing backbone of the AI boom is only getting more expensive, and more consequential for each company's bottom line.
