Amazon’s continued cloud strength drives Q3 earnings

Amazon posted robust third-quarter earnings, driven by the continued strength of its cloud unit. 

Increasing demand for AI and enterprise services lifted revenue and overall profitability. The Seattle-based company reported a net income of $21.2 billion for the third quarter ended September 30, 2025, a 38.6% increase from $15.3 billion in the same period last year. 

The company’s cloud computing arm, Amazon Web Services (AWS), delivered an operating income of $11.4 billion, up 9.6% year over year, accounting for 65.5% of Amazon’s total operating income of $17.4 billion. 

The results underscore AWS’s outsized contribution to Amazon’s topline and its pivotal role as the company’s profit driver.

“AWS is growing at a pace we haven’t seen since 2022,” said Andy Jassy, President and CEO, Amazon. “We continue to see strong demand in AI and core infrastructure, and we have been focused on accelerating capacity.”

In the third quarter, Amazon’s net sales rose 13% YoY to $180.2 billion, while revenue from AWS jumped 20% to $33 billion. 

Amazon continues to lead the global cloud infrastructure market, holding a 30% share as of Q2 2025, ahead of Microsoft (20%) and Google (13%), according to Synergy Research Group. 

Both rivals have also reported strong momentum in cloud services. Google Cloud revenue surged 33.5% in the third quarter, while Microsoft posted a 40% increase in Azure and other cloud services revenue in its fiscal first quarter. 

The sector’s accelerating growth reflects the broad adoption of artificial intelligence (AI), which is driving demand for advanced cloud computing capabilities.

The big AI opportunity

Amazon, like its BigTech peers, is tapping into the big AI opportunity. The company is leveraging its vast cloud infrastructure through AWS to power and host a growing range of AI and machine learning services.

“We continue to see strong momentum and growth across Amazon as AI drives meaningful improvements in every corner of our business,” Jassy remarked, noting that the company has added more than 3.8 gigawatts of power in the past 12 months.

“We’re now double the power capacity that AWS was in 2022 and we’re on track to double again by 2027,” Jassy said. “You are going to see us continue to be very aggressive investing in capacity because we see the demand as fast as we’re adding capacity.”

Amazon’s capital expenditure (capex) for Q3 was $34.2 billion, taking the total spending to $89.9 billion so far this year, according to Amazon Senior Vice President and Chief Financial Officer Brian Olsavsky.

“This primarily relates to AWS as we invest to support demand for AI and core services and in custom silicon like Trainium, as well as tech infrastructure,” Olsavsky noted during the third quarter earnings call.

“We’ll continue to make significant investments, especially in AI as we believe it to be a massive opportunity with the potential for strong returns on invested capital over the long term,” he added.

Amazon expects full year cash capex to be approximately $125 billion in 2025, Olsavsky said, adding that the company expects the amount to increase in 2026.

Besides Amazon, other tech giants including Microsoft, Google, and Meta have also sharply ramped up capex in recent quarters to expand server and data centre capacity, reflecting the surging computational demands of AI. 

Many technology firms are also restructuring to prioritise AI initiatives. Earlier this week, Amazon announced a new round of corporate job cuts affecting 14,000 employees worldwide as it seeks to streamline operations and channel more resources towards AI development.

Stores and other businesses

Net sales from Amazon’s online stores climbed 10% YoY to $67.4 billion, while physical store revenue rose 7% to $5.6 billion. 

Alongside its cloud operations, advertising remained a key growth driver, with ad services revenue surging 24% to $17.7 billion, outpacing gains in the company’s core retail segment. Subscription services also continued to expand steadily, posting an 11% increase to $12.6 billion for the quarter.

Looking ahead

The ecommerce giant is optimistic in its forecast for the fourth quarter—its largest of the year. 

Net sales are expected to range between $206 billion and $213 billion, up 10% to 13% compared with the year-ago period. Operating income is projected to be between $21 billion and $26 billion, up from $21.2 billion in Q4 2024.