Photo Credit: simone.brunozzi/Flickr.com

Amazon (Nasdaq: AMZN) recently announced its third-quarter results that beat market expectations driven by its growth in its cloud and advertising businesses.

Amazon’s Financials

Amazon’s third quarter revenues grew 11% to $158.9 billion, exceeding analyst estimates of $157.2 billion. Net income increased to $15.3 billion or $1.43 per share, compared with net income of $9.9 billion, or $0.94 per share a year ago. Analysts estimated EPS of $1.14 per share.

By segment, Net Product sales grew 7% to $67.6 billion and Net Service sales grew 14% to $91.3 billion.

Revenues from Amazon Web Services (AWS) increased 19% to $27.4 billion narrowly missing analyst estimates of $27.5 billion. Advertising services revenue grew 19% to $14.3 billion, in line with analyst estimates of $14.3 billion. 

Online stores revenue grew 7% to $61.4 billion. Subscription services revenues grew 11% to $11.3 billion. Physical stores revenue grew 5% to $5.23 billion. Revenue from third party sellers grew 10% to $37.9 billion.

North American sales grew 9% to $95.5 billion, while international sales grew 12% to $35.8 billion.

Amazon expects third quarter revenues of $181.5-$188.5 billion or a growth 7% to 11%. Analysts estimate revenues of $186.2 billion.

Amazon’s AI Business

During the recent earnings call, Amazon CEO Andy Jassy said that its AI business has reaccelerated its AWS business. Its AI business is now a multibillion-dollar revenue run rate business that is growing at a triple-digit growth rate. 

AWS has a three-layer GenAI stack: custom training chips, a managed service called Bedrock, and applications like a coding companion called Amazon Q and shopping assistant called Rufus. 

Rufus has recently become available in Canada, France, Germany, India, Italy, Spain, and the UK. The company also launched Project Amelia, an AI assistant for sellers that offers tailored business insights to boost productivity and drive seller growth.

Amazon has launched new foundation models in Amazon Bedrock and Amazon SageMaker, including AI21 Labs’ Jamba 1.5 family, Anthropic’s upgraded Claude 3.5 Sonnet, Meta’s Llama 3.2, Mistral Large 2, and multiple Stability AI models.

It has also launched new memory-optimized, compute-optimized, and general purpose Amazon EC2 instances based on AWS’s latest generation Graviton4 processor, which delivers 75% more memory bandwidth and 30% better compute performance than the previous generation Graviton chips.

Amazon has recently entered a strategic collaboration with Databricks to accelerate the development of custom models built with Databricks Mosaic AI on AWS, and for Databricks to leverage AWS Trainium chips as the preferred AI chip to help customers improve price-performance when building generative AI applications.

Its stock is trading at $214.1 with a market capitalization of $2.25 trillion. It touched a 52-week high of $215.09 this week. It had fallen to a 52-week low of $139.53 in November last year.

More By This Author:

Will Apple’s AI Investments Drive Hardware Sales?
Cloud Stocks: Microsoft’s AI To Hit $10B ARR
Meta’s Investment Outlook Keeps Growing