Amazon's Q3 profit surges by 55% to over $15 billion
Amazon has reported a whopping 55.2% increase in its third-quarter profit, largely due to the strong performance of its cloud computing division, Amazon Web Services (AWS). The company's shares surged by about 6% in after-hours trading after the announcement. For the quarter ending September 30, 2024, Amazon posted a net profit of $15.3 billion, exceeding last year's $9.9 billion for the same period.
AWS posted a staggering $10.4B operating income
Amazon's cloud computing platform AWS also posted a whopping $10.4 billion operating income in Q3, a 49.7% year-over-year (YoY) increase. This accounts for almost 60% of Amazon's overall operating income for the quarter, which was $17.4 billion. Notably, Andy Jassy, Amazon President and CEO said that "AWS now stands at a $110 billion annualized run rate."
Net sales and AWS segment sales rise in Q3
In the third quarter of this year, Amazon's net sales increased by 11% YoY to $158.9 billion. At the same time, AWS segment sales grew by 19% YoY to $27.5 billion. The company expects strong holiday quarter results, thanks to faster shipping times and a shift in strategy to stock lower-cost items.
Leader in cloud infrastructure market
Amazon remains the leader in the cloud infrastructure market, with Microsoft and Google as its main competitors. According to Synergy Research Group data for Q2 2024, their market shares stood at 32%, 23%, and 12%, respectively. Jassy emphasized AWS's AI business as a multi-billion-dollar revenue generator that continues to grow at a triple-digit YoY percentage rate.
Amazon to increase capital expenditure for AI growth
Amazon, along with other tech giants such as Microsoft, Google, and Meta, has ramped up capital expenditure to expand server and data center infrastructure. This is because of the exponential growth of artificial intelligence (AI) and its demanding computational requirements. Brian Olsavsky, Amazon's Senior Vice President and CFO revealed that the company expects to spend approximately $75 billion in capex in 2024.
Online and physical store sales see YoY increase
Amazon's online stores posted net sales of $61.4 billion, an 8% YoY increase, while sales from physical stores grew by 5% YoY to $5.2 billion. The company also witnessed a 7% growth in retail sales for the quarter ending September 30, which stood at $61.41 billion. Apart from its cloud business, advertising also proved to be a strong performer with ad services sales growing 19% YoY to $14.3 billion for the quarter.
