Amazon Shares Soar 11% as AWS Cloud Growth Fuels AI Comeback

Key Takeaways

• Amazon shares surged over 11% after strong AWS cloud growth and bullish outlook
• AWS revenue rose 20% to $33 billion, more than double Google Cloud’s revenue
• At least 23 brokerages raised price targets following the earnings report

Amazon’s stock jumped more than 11% in early Friday trading as the company’s cloud computing division showed remarkable growth, easing investor concerns about its position in the artificial intelligence race.

The strong performance marks a significant turnaround for Amazon, which had been the worst performer among the “Magnificent Seven” tech giants with just 1.6% growth year-to-date before Friday’s surge.

AWS Cloud Unit Fuels Growth

Amazon Web Services, the company’s cloud computing division and AI investment hub, reported 20% revenue growth in the third quarter. While Microsoft Azure grew 40% and Google Cloud 34%, AWS’s massive scale at $33 billion in revenue—more than double Google Cloud’s $15.16 billion—makes its growth particularly impactful.

“There was definitely concern about AWS losing market share to Microsoft Azure and Google Cloud … But now AWS is aboard the train as well and they’re seeing a big revenue increase,” said Jed Ellerbroek, portfolio manager at Argent Capital.

Ellerbroek noted that investors had been expecting an AWS boost in the fourth quarter or early next year, but “it’s already come this quarter.”

Leadership and Market Response

Amazon CEO Andy Jassy stated that AWS is “growing at a pace we haven’t seen since 2022,” driven by strong demand for AI and core infrastructure services.

In response to this demand, Amazon plans to increase capital expenditures for the coming year, joining other Big Tech companies in ramping up investments.

“Amazon delivered one of the strongest performances of this earnings season, quieting any lingering doubts about its ability to execute at scale,” said eToro market analyst Farhan Badami.

Retail and Advertising Strength

Beyond cloud computing, Amazon’s retail and advertising businesses delivered robust results. The company’s retail division grew 11% year-over-year, while advertising sales jumped 24% to $17.7 billion in the quarter.

“Amazon’s retail results were very good. They’re growing 11% year over year. Name me another big retailer in America growing that fast – they don’t exist,” said Jed Ellerbroek of Argent Capital.

The advertising growth was driven by expanded ad placements across Echo devices, grocery carts, and sponsored listings.

Following the strong earnings report, at least 23 brokerages raised their price targets on Amazon stock, signaling continued confidence in the company’s growth trajectory.