Amazon reports higher sales and earnings for 3Q, helped by its fast-growing web services business

Audio By Carbonatix

NEW YORK (AP) — Amazon posted higher fiscal third quarter profit and sales compared with a year ago, fueled by accelerating growth in its cloud computing business and strong spending by its customers looking for low prices at a time when inflation is resurging.

The results, announced Thursday, beat Wall Street expectations. The company's prominent cloud computing arm also surpassed analysts' expectations, rising 20%. But Amazon issued a cautious sales outlook for the fiscal fourth quarter.

Shares, however, soared nearly 13% in after-hours trading.

Analysts are analyzing Amazon's results, along with other retailers' earnings performances, to get insight into how shoppers are spending heading into the holiday season and how the online behemoth is managing cost increases from President Donald Trump's tariffs.

But Amazon, based in Seattle, is also under pressure to shore up confidence among investors that its computing arm Amazon Web Services is just as powerful as Microsoft’s Azure and Google’s Google Cloud platform. Amazon delivered better-than-expected 20% growth for AWS, following a 17.5% growth in the fiscal second quarter. Andy Jassy, president and CEO of Amazon, noted in a statement that AWS is growing at a pace it hasn't seen since 2022.

Last week Amazon grappled with a massive outage of AWS after a problem disrupted internet use around the world for most of the day, taking down a broad range of online services, including social media, gaming, food delivery, streaming and financial platforms.

Jassy also noted Amazon is seeing strong momentum and growth across Amazon as artificial intelligence drives “meaningful improvements in every corner of our business.”

Jassy also pointed out that in stores, Amazon continues to realize the benefits of innovating in its fulfillment network, and it's on track to deliver to Prime members at the fastest speeds ever again this year, expand same-day delivery of perishable groceries to over 2,300 communities by end of year, and double the number of rural communities with access to Amazon’s same-day and next-day delivery.

Amazon is rapidly automating its warehouses, raising big questions on how many workers it will need in the future.

In fact, Amazon announced on Tuesday that it’s cutting about 14,000 corporate jobs as it ramps up spending on artificial intelligence and cuts costs elsewhere. Teams and individuals impacted by the job cuts were notified Tuesday. Amazon has about 350,000 corporate employees and a total workforce of about 1.56 million. The cuts amount to about a 4% reduction in its corporate workforce.

Jassy told analysts that the announcement on job cuts wasn't “really financially driven and it's not even really AI driven."

“It's culture,” he said. “And if you grow as fast as we did for several years, the size of businesses, the number of people, the number of locations, the types of businesses you’re in, you end up with a lot more people than what you had before, and you end up with a lot more layers.”

Late last month, Amazon unveiled a new robotics system — being tested in South Carolina — for its warehouses that coordinates multiple arms to perform picking, stowing, and consolidating tasks simultaneously. This technology effectively collapses three assembly lines into one, the company said.

Amazon is also testing an AI agent that helps human managers deploy workers and avoid bottlenecks. The system allows operators to spend less time analyzing dashboards and more time coaching teams, creating safer work environments, the company said.

Amazon's strategies seem to be powering its latest results.

Amazon posted net income of $21.12 billion, or $1.95 per share, for the quarter ended Sept. 30. That's up from $15.33 billion, or $1.43 per share, a year ago.

Analysts had expected $1.57 per share for the quarter, according to FactSet.

Amazon’s sales rose to $180.2 billion, up from $158.88 billion in the year ago period.

Analysts had expected $177.91 billion, according to FactSet.

The number of items that Amazon sold in the latest period increased 11%, the company said.

In late July, Jassy touted its more than 2 million sellers in its third-party marketplace, all with different strategies of whether to pass on higher costs to shoppers. He also told analysts that it hadn't seen “diminishing demand nor prices meaningful appreciating."

Amazon said it expects sales for the fiscal fourth quarter to be in the range of $206 billion to $213 billion.