Amazon doubles Google's cloud revenue but trails in stock performance YOY

Amazon’s share price skyrocketed over 10% after the online retail behemoth reported better-than-expected earnings. The surge has also been powered by a rising demand for its cloud computing services.

Amazon shares soared nearly 12% in premarket trading on Friday after the company reported strong growth at its cloud unit and a bullish sales outlook, easing fears that the tech giant was falling behind its rivals in the AI race. Revenue at Amazon Web Services, the hub of the company’s recent AI investments, rose 20% in the third quarter.

Amazon doubles Google’s cloud revenue but trails in stock performance YOY

Amazon posted $33 billion in quarterly cloud revenue, more than double that of Google’s $15.16 billion. This was higher than the $32.42 billion, representing an 18.1% growth from the previous year, as expected by analysts polled by StreetAccount. 

As reported by Cryptopolitan, the company also posted $180.2 billion in revenue, up 13% year-over-year, and $1.95 earnings per share, surpassing the $1.57 EPS analysts had expected.

Meanwhile, Amazon officially opened its $11 billion AI data center called Project Rainier. The facility, first announced last year, is intended to train and run models from the Claude creator Anthropic. Amazon, which has invested $8 billion in Anthropic, stated that the startup will use 1 million of its custom Trainium2 chips by the end of 2025.

The new data center is expected to help Amazon battle the perception that it’s missing out on a flurry of highly lucrative AI deals for cloud services. Anthropic and Google deepened their cloud partnership last week in a deal worth tens of billions of dollars, while Meta has inked hefty cloud deals with Google and Oracle in recent months.

According to Ed Ellerbroek, portfolio manager at Argent Capital,  “There was definitely concern about AWS losing market share to Microsoft Azure and Google Cloud […] But now AWS is aboard the train as well, and they’re seeing a big revenue increase.”

The Seattle-based company has relied on strong cloud demand to offset pressures on e-commerce as consumer spending softens amid inflation. Still, concerns over its slower pace in winning major AI deals have weighed on the stock, which is up just 1.6% this year, significantly lower compared to Microsoft, which is up 24%, and Google, which has jumped 49%. This makes it the worst performer among the Magnificent Seven.

Amazon CEO  says that tariffs could still affect Amazon’s performance

According to Amazon’s reports, operating income remained flat at $17.4 billion, primarily due to two major charges: a $2.5 billion legal settlement with the Federal Trade Commission (FTC) and $1.8 billion in severance costs associated with planned job cuts.

The settlement with the FTC was reached over long-running allegations from the US regulator that it had used deceptive practices to enroll consumers in Amazon Prime and made it difficult for them to cancel their subscriptions.

The online retail giant, which admitted no wrongdoing in the settlement, paid $1.5 billion into a consumer fund for refunds and $1 billion in civil penalties.

Amazon CEO Andy Jassy said tariffs could still affect Amazon’s performance. During last quarter’s call, he noted that the tariff increases under President Donald Trump hadn’t hurt consumer demand or forced any price spikes… at least not yet.

To that end, Amazon announced it would reduce its workforce by 14,000 positions to streamline operations as it invests in AI. The cuts are expected to target areas such as human resources, advertising, and management in a group that has 350,000 office positions, out of a total of more than 1.5 million employees.

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