Amazon's Cloud Unit AWS Achieves Highest Profit Margin in a Decade

Amazon (NASDAQ:AMZN) announced that its cloud unit's (AWS) revenue increased by 19% in the third quarter, falling short of analyst expectations. According to the statement, the total revenue for Amazon Web Services reached $27.45 billion, while Wall Street's expectation was $27.52 billion. AWS generated an operating income of $10.45 billion, representing 60% of the parent company's profit. Analysts had expected $9.15 billion. The unit's profit margin of 38% marked the highest margin for AWS since 2014.

In a discussion with analysts, Amazon CEO Andy Jassy, who previously led AWS, stated that the annual revenue from AWS's artificial intelligence segment is in the billions and has more than doubled year-over-year. Jassy mentioned, "I believe there is more demand than we can currently meet even if we had more capacity today. I think nearly everyone is operating with less capacity than the demand they’re seeing, and one of the areas where companies can utilize more supply is chips."

During this quarter, Amazon spent $22.6 billion on property and equipment, an 81% increase compared to the previous year. Jassy indicated that Amazon plans to spend $75 billion on capital expenditures in 2024, expecting an even higher figure in 2025.