Amazon AI Gains Beat Expectations --- Tech giant posts big rises in sales, profit, plans major boost in data capacity

“Seen as a laggard in artificial intelligence, Amazon.com assuaged some concerns Thursday, reporting faster-than-expected increases in AI-related revenue and aggressive plans to grow data-center capacity.

 

The e-commerce giant said sales for the period rose 13%, to $180 billion. Net profit surged 39% to $21.2 billion.

 

Revenue from Amazon Web Services, the source of much of the company's profits, climbed 20% in the three-month period -- the fastest rate of growth since 2022. Rivals Alphabet and Microsoft said Wednesday that their cloud-computing businesses grew 40% and 34%, respectively.

 

On a call with analysts, Chief Executive Andy Jassy noted that Amazon's growth was from a much higher base.

 

Amazon said it expected sales for the fourth quarter to be between $206 billion to $213 billion and operating profit of between $21 billion and $26 billion, as the company enters the busy holiday shopping season.

 

The company has expanded its same-day delivery offerings for groceries and opened warehouses in rural areas of the U.S. in the hopes of capturing more of America's wallet.

 

Amazon said one-time charges from a legal settlement and a workforce restructuring weighed on earnings for the period. In September, the company agreed to pay $2.5 billion to settle a lawsuit by the Federal Trade Commission over its Prime subscription policies. This week, the company announced it was cutting 14,000 white-collar jobs, which Amazon expects to cost $1.8 billion.

 

Amazon shares gained more than 10% in after-hours trading.

 

Amazon is a giant in the cloud-computing business, hosting websites, apps and services for an array of companies and clients. Its importance was underlined earlier this month when a problem in one of its East Coast data centers knocked out access to websites and apps for millions of Americans.

 

But much of Amazon's future growth relies on next-generation offerings in AI. The company has said that demand for Amazon cloud and AI products has outpaced its ability to bring new data centers online. While Amazon has the biggest cloud business by revenue, the perception that the tech giant is falling behind nimbler competitors has weighed on its stock price.

 

The company said it made capital expenditures of $34.2 billion in the third quarter and expected to spend $125 billion for the full year.

 

Jassy said customers were buying up cloud-computing and AI services as fast as Amazon could make them available in light of its capacity constraints.

 

"Today overall in the industry, maybe the bottleneck is power," Jassy said. "I think at some point it might move to chips. But we're bringing in quite a bit of capacity and as fast as we're bringing it in right now, we're monetizing it."

 

On Wednesday, Amazon said one of its largest AI data-center investments, Project Rainier, is fully operational. Jassy said Amazon has doubled its data-center capacity since 2022 and expected it to double again before the end of 2027.

 

The company continues to benefit from strong U.S. consumer spending, despite rising fears about the economy and job losses. Amazon has managed so far to weather President Trump's trade war, with sales continuing to rise despite the reliance of many Amazon sellers on China for materials and manufacturing. The company has said it hadn't detected "meaningful" price increases on Amazon.com, indicating that sellers may be absorbing some tariff costs.

 

On the earnings call, Jassy said the recent announcement of 14,000 job cuts was mainly aimed at reversing a period of excessive hiring during the pandemic and to preserve a startup-like culture at Amazon.” [1]

 

1. Amazon AI Gains Beat Expectations --- Tech giant posts big rises in sales, profit, plans major boost in data capacity. McLain, Sean.  Wall Street Journal, Eastern edition; New York, N.Y.. 31 Oct 2025: A1.