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Amazon Web Services growth will be a major factor in the company’s quarterly earnings report Thursday. (GeekWire File Photo / Todd Bishop)
Amazon’s cloud growth rate has been increasing steadily in recent quarters, and investors are looking for the trend to continue when the company reports earnings Thursday for the December quarter and 2024 fiscal year.
Wall Street expects year-over-year growth of 19.3% in Amazon Web Services revenue, which would be the largest increase in two years, according to LSEG data reported by Reuters.
Amazon Web Services remains a major financial engine for the larger company.
AWS revenue in the third quarter was a record $27.45 billion, reaching an annual revenue run rate of nearly $110 billion.
AWS operating profits in the third quarter topped $10.4 billion, representing about 60% of Amazon’s companywide operating profits.
Overall, analysts expect Amazon to post quarterly revenue of $187.23 billion for the December quarter, up more than 10% from a year ago, with earnings of $1.48 per share, an increase of 48% over the same period.
Amazon’s report comes after Microsoft Azure and Google Cloud both posted revenue growth below Wall Street’s expectations. Both companies are boosting capital expenditures significantly to increase capacity for what they foresee as a boom in AI demand — Microsoft to $80 billion this fiscal year, and Google parent Alphabet to $75 billion.
As with Microsoft and Google, key questions for Amazon will include the impact of new AI efficiencies on future demand for the cloud computing needed to train and refine AI models, as demonstrated by China’s DeepSeek.
Meanwhile, in Amazon’s core e-commerce business, the company and third-party sellers faces the potential for higher supply chain costs due to new tariffs on goods manufactured and imported from China.
Amazon’s online stores segment generated $61.4 billion in the third quarter, or about 38.6% of its overall net sales of $158.9 billion. The fourth-quarter results will include sales from the critical holiday shopping season.
Check back Thursday afternoon for Amazon’s full results.
