Amazon reported impressive earnings for the third quarter, with strong performance in its cloud computing segment, AWS. Following the announcement, the company”s stock surged over 13 percent in after-hours trading.
Despite facing a series of recent challenges, Amazon demonstrated resilience, posting a 20 percent revenue increase in AWS, amounting to $33 billion in sales. During the earnings call, CEO Andy Jassy highlighted the demand for AI workloads and core operations within AWS, emphasizing its superior functionality, security, and operational performance.
In comparison, Google Cloud reported revenue of $15.2 billion for Q3 2025, reflecting a 34 percent year-over-year increase, while Microsoft”s Intelligent Cloud, which includes Azure, saw revenues of $30.9 billion, a 28 percent increase.
Although AWS continues to grow, it is doing so at a slower pace than its competitors, largely due to its already substantial market position. This earnings report follows Amazon”s announcement of a significant workforce reduction, with plans to cut 14,000 jobs, leading to an estimated $1.8 billion in severance costs.
During the call, Jassy clarified that the job cuts are not directly related to AI initiatives, stating they are aimed at normalizing the company culture after multiple acquisitions. Furthermore, Amazon reported a decline in free cash flow, falling to $14.8 billion, down from $47.8 billion in Q3 2024, attributed to a dramatic increase in capital expenditures.
The company”s capital outlay for the quarter reached $34.2 billion, with projections for 2025 capital expenditures set to hit $125 billion, up from earlier estimates. This significant spending reflects Amazon”s commitment to developing AI infrastructure, including a major $10 billion investment in a new data center in Richmond County, North Carolina.
Jassy emphasized the necessity for enhanced capacity to support the growing demand for AI capabilities on AWS. He noted that in the past year, the company has added over 3.8 gigawatts of power, doubling its capacity since 2022, with plans to double it again by 2027.
In addition to infrastructure improvements, Amazon achieved a pre-tax gain of $9.5 billion from its investments in Anthropic, a company focused on AI. Initially investing $8 billion in Anthropic, Amazon“s commitment was valued at $13.8 billion by May 2024. Recently, Amazon launched Project Rainer, an AI compute cluster featuring 500,000 Trainium2 chips to support Anthropic”s Claude models, indicating a strategic return on its investment.
Overall, while Amazon navigates challenges, its robust earnings reveal a company still positioned for growth, particularly within the rapidly evolving AI space.
