Amazon's cloud arm beat Wall Street's forecasts as AI demand pushes growth to its highest rate since late 2021, which matters to anyone who rents cloud services.
Amazon Web Services, the cloud arm of Amazon, grew 39% in the third quarter compared with a year earlier. That is its fastest pace since the fourth quarter of 2021. Revenue hit $45.98 billion, above the $45.29 billion analysts expected. Growth in the second quarter was about 37%, so the business is speeding up.
The cloud means renting computing power and storage over the internet instead of owning your own machines. Many apps and websites you use run on AWS. Profit grew even faster than sales. AWS operating income rose 55% to $17.77 billion, beating the $16.97 billion analysts expected.
AWS now makes up almost 23% of Amazon's revenue, a record. CEO Andy Jassy said core compute and storage revenue grew at their fastest rates in several years.
The big cloud companies are racing to build data centers that can handle heavy demand for artificial intelligence. During the quarter, AWS announced plans to add more Nvidia graphics chips, which are used for AI work. It also bought a data analysis startup called DuckLabs and signed deals with Meta and OpenAI.
Amazon also plans to sell access to its own Trainium chips, which are used to train AI models, outside of AWS. Jassy said customers keep asking for it and that Amazon intends to do so late in 2027. Google has used a similar approach with its own AI chips.
Jassy gave a bold forecast. He said AWS can grow north of 40% in each of 2027 and 2028 and become a trillion-dollar revenue business in the next five to 10 years. That is a company projection, not a certainty.
For businesses that rent cloud services, the competition among Amazon, Microsoft and Google is heating up, and the AI boom is driving much of the spending. The material does not say how this will affect prices for customers.
AWS is growing faster again on AI demand, and its rivals are growing fast too, so cloud competition is likely to stay intense.
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