Amazon’s latest quarterly earnings report has garnered significant attention, showing robust growth that surpassed analysts’ expectations. The company disclosed earnings per share (EPS) of $1.95 alongside revenues totaling $180.2 billion for the third quarter. This performance surpassed forecasts, which predicted an EPS of $1.58 on revenues of $177.8 billion.
A notable highlight for Amazon was its cloud computing division, Amazon Web Services (AWS), which achieved $33.01 billion in revenue, outpacing estimates of $32.4 billion. The growth of AWS is particularly important in the context of increasing investments in artificial intelligence data centers announced by competitors Microsoft and Google, just a day prior. Despite Microsoft revealing plans to ramp up spending in AI, its stock fell nearly 3%, while Google shares rose 2.5%.
Market reaction to Amazon’s earnings was positive, with the company’s stock climbing over 9% following the announcement. However, despite this spike, Amazon’s shares have lagged behind those of its competitors this year. Year-to-date, Amazon’s stock is up only 2.4%, compared to a 24% gain for Microsoft and an impressive 49% increase for Google.
Further insights into Amazon’s capabilities in the AI sector were given, particularly regarding its Trainium2 AI chip. The company reported that this chip has evolved into a multibillion-dollar business, showing an impressive 150% growth quarter over quarter. Additionally, AWS launched its Project Rainier AI cluster, which includes 500,000 Trainium2 chips.
However, Amazon faces challenges in establishing its foothold in the AI market against rivals like Microsoft and Google. Microsoft has aligned itself with OpenAI, significantly boosting its AI services, while Google promotes its own AI developments. Amazon’s primary AI collaboration is with Anthropic, a startup that has also forged a relationship with Google, creating competition for AI workload opportunities.
On Wednesday, Amazon announced that Anthropic would utilize 1 million custom Amazon chips for training and operating its AI models. Although this is a positive development for Amazon, Anthropic’s simultaneous agreement with Google complicates its competitive landscape.
As analysts and investors continue to monitor the evolving dynamics of the AI market and cloud computing, Amazon’s latest earnings provide a snapshot of its current standing and growth trajectory in an increasingly competitive sector.
