Amazon beats earnings expectations on strong cloud growth

The retail and cloud giant reported total revenues of $158.9 billion for the quarter that ended in September — an 11% increase from the previous year. Amazon reported net income of $15.3 billion and earnings per share of $1.43 — both increasing year over year.

Amazon Web Services, Amazon’s cloud-computing division, reported $27.5 billion in revenue, which was up 19% year over year. A year earlier, Amazon reported 12% year-over-year revenue growth for the division.

Ads also played a role in Amazon’s strong showing this earnings season. The retailer’s ad sales surged 19% year over year in the third quarter, to $14.3 billion.

“As we get into the holiday season, we’re excited about what we have in store for customers,” Amazon chief executive Andy Jassy said in a statement. “We kicked off the holiday season with our biggest-ever Prime Big Deal Days and the launch of an all-new Kindle lineup that is significantly outperforming our expectations,” he said, adding that the company is looking forward to more deals, Prime Video specials, and “over 100 new cloud infrastructure and AI capabilities that we’ll share at AWS re:Invent the week after Thanksgiving.”

The company was expected to report revenues of $157.3 billion for the quarter, according to analyst estimates compiled by FactSet (FDS). Amazon was expected to report EPS of $1.14. In the last quarter, the company issued lower-than-expected guidance for the third quarter, setting revenue expectations between $154 and $158.5 billion — or between 8% and 11% year over year growth.

Amazon shares were down 3.39% at the market close on Thursday at $186.19. After hours, the stock initially shot up by about 5%. The company’s shares are up around 24% so far this year.

After it missed Wall Street’s expectations last quarter, Amazon’s shares slid in after-hours trading.

Earlier this month, Amazon announced that it had signed three agreements “to support the development of nuclear energy projects.” The agreements include building “several” small modular reactors (SMRs), which have “a smaller physical footprint, allowing them to be built closer to the grid,” Amazon said. And compared with traditional reactors, SMRs can apparently be put online faster because construction takes less time.

In April, Jassy outlined how the company is focusing on AI in his annual letter to shareholders. Jassy said Amazon is “optimistic that much of this world-changing AI will be built on top of AWS.” Earlier this year, Amazon completed its $4 billion investment in AI startup Anthropic — its largest investment in an outside company ever, as it steps up its efforts against rivals.

However, Amazon’s plans for an AI-powered version of its virtual-assistant, Alexa, are reportedly not close to being ready. Earlier this week, Bloomberg reported that technical challenges are postponing Alexa AI’s release.

The company previously disputed doubts about its current Alexa AI efforts, and said its Artificial General Intelligence team has access to the company’s in-house chips, Trainium and Inferentia, and Nvidia $NVDA’s (NVDA) graphics processing units, or GPUs.

Looking ahead, Amazon set its fourth-quarter revenue guidance between $181.5 billion and $188.5 billion — or between 7% and 11% growth compared to the previous fourth quarter.