Amazon.com Inc. (AMZN) saw its shares surge in after-hours trading following a stellar third-quarter earnings report that handily surpassed market expectations, signaling a powerful return to form for the e-commerce and cloud giant. The robust results, coupled with aggressive and well-received investments in artificial intelligence, have reignited investor enthusiasm for its growth trajectory.
The company reported revenue of $180.2 billion for the quarter, a 13.4% year-over-year increase and ahead of the $177.76 billion consensus estimate. This growth was well-balanced across its key divisions: North America sales rose 11% to $106.3 billion, International revenue grew 14% to $40.9 billion, and the cloud unit, Amazon Web Services (AWS), accelerated with a 20% gain to $33 billion.
Profitability metrics were equally impressive. Adjusted operating profit jumped 25% to $21.7 billion. On a GAAP basis, earnings per share came in at $1.95, significantly higher than the $1.56 analysts had forecast. The results included a $9.5 billion gain related to the mark-up in its investment in AI startup Anthropic.
A major highlight was the reacceleration of AWS, which CEO Andy Jassy said is growing at its fastest pace since 2022. He specifically highlighted the explosive demand for the company’s proprietary AI chips, noting that its Trainium processors saw a 150% quarter-over-quarter increase and are now fully booked, evolving into a multi-billion-dollar business.
In a clear bet on the AI boom, Amazon announced a substantial increase in its full-year capital expenditure forecast by $7 billion to a total of $125 billion, hinting that the figure could rise further next year. Unlike the mixed reactions that often greet massive capex plans from other tech giants, Amazon’s move was met with investor approval. Analysts interpret this as a strong market endorsement of the expected return on the company’s AI investments.
Despite its massive scale, Amazon’s core businesses demonstrate significant room for expansion, reinforcing the bullish outlook.
With a market capitalization of approximately $2.6 trillion, some market observers argue that Amazon’s valuation remains attractive. Its forward price-to-earnings ratio has contracted significantly from a year ago to around 37x. As the company continues to unlock profit potential from its high-margin cloud and advertising segments, the valuation case strengthens.
Some analysts now project that Amazon, with its leading positions in e-commerce, cloud computing, and digital advertising—supercharged by the new AI engine—has the potential to reach a $5 trillion market cap within the next three years, positioning it to become the next super-cap titan.
