Amazon Rallies 13% as Cloud and AI Power Record Earnings

Amazon shares jumped 13.2% after the company posted stronger-than-expected third-quarter earnings, driven by a rebound in its cloud computing division and steady consumer spending despite stubborn inflation. Revenue climbed 13% year-on-year to $180.2 billion, while net income surged to $21.1 billion from $15.3 billion a year earlier, marking one of the company’s most profitable quarters since 2021.

The core growth engine was Amazon Web Services, which expanded 20% compared with 17.5% in the previous quarter, its fastest pace since 2022. Analysts had forecast a slowdown, but renewed enterprise demand for AI-driven tools pushed AWS revenue above expectations, helping restore confidence after last week’s temporary global outage. The unit now accounts for roughly 17% of total company sales but nearly 70% of operating income.

AI spending also drove efficiency gains across logistics and retail operations, with the company expanding same-day delivery of groceries and other perishables to more than 2,300 communities while cutting 14,000 corporate jobs to streamline costs. Amazon’s total workforce now stands at about 1.56 million, down 4% from last year. Despite softer forward guidance, management projects fourth-quarter revenue between $206 billion and $213 billion, implying growth of up to 8%.

What Does This Mean for Me?

Investors interpreted the results as a signal that Amazon is once again capitalizing on both AI adoption and disciplined cost control. Markets will now watch whether AWS can sustain double-digit expansion through 2026 as interest rates hover near 5.25%, testing how much more growth AI can deliver before margins tighten.