Amazon (AMZN) Stock: Earnings Beat Driven by AWS and AI Expansion

TLDR:

• Amazon $AMZN jumped 13% after beating Q3 earnings expectations.

• EPS hit $1.95 vs $1.57 expected, revenue reached $180.2B.

• AWS grew 20.2% to $33B, strongest pace since 2022.

• Capital spending forecast raised to $125B for 2025.

• Layoffs and AI expansion continue under CEO Andy Jassy.

Amazon shares jumped 13% after posting stronger-than-expected third-quarter results. Investors cheered the rebound in its cloud business, AWS, and solid revenue guidance.

Amazon.com, Inc., AMZN

The company reported adjusted earnings of $1.95 per share, crushing the $1.57 consensus. Total revenue reached $180.2 billion, beating Wall Street’s $177.8 billion estimate.

AWS Growth and AI Momentum

AWS revenue climbed 20.2% year over year to $33 billion, topping the $32.5 billion projection. CEO Andy Jassy said AWS is “growing at a pace we haven’t seen since 2022.”

Jassy highlighted robust demand for AI infrastructure and core cloud services. He noted Amazon added 3.8 gigawatts of new capacity over the past 12 months.

Amazon also opened its $11 billion Project Rainier data center, designed for Anthropic’s AI models. The company’s AI tools, including Bedrock and Q, are seeing growing adoption from enterprise clients.

Higher Spending and Streamlined Workforce

Amazon raised its full-year capital expenditure forecast to $125 billion, up from earlier estimates of $118 billion. CFO Brian Olsavsky said spending could rise further in 2026 to support data center expansion.

Despite ramping up AI investment, Amazon continues cost-cutting measures elsewhere. The company announced plans to cut 14,000 corporate jobs to speed decision-making and reduce bureaucracy.

Retail and Advertising Strength

Core online sales rose 10% in the quarter, boosted by July’s Prime Day event. Advertising revenue grew to $17.7 billion, exceeding forecasts of $17.3 billion.

Amazon’s shopping chatbot, Rufus, now serves over 250 million customers. The company said 60% of users are more likely to complete a purchase after using the tool.

Analyst Confidence Returns

UBS analyst Stephen Ju lifted his price target on Amazon to $279 from $271, maintaining a Buy rating. He expects upside across e-commerce, cloud, and satellite ventures.

Ju said AWS’s momentum could carry into 2026 as new capacity comes online. Still, he noted customer spending trails Microsoft Azure and Google Cloud heading into year-end.

For Q4, Amazon guided revenue between $206 billion and $213 billion, ahead of the $208 billion average estimate. Operating income is projected at $21–$26 billion.

Shares are up just 2% year-to-date but gained more than 13% in after-hours trading following the earnings release.

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