Amazon Rockets as AWS Reignites, AI Demand Lifts Outlook

With input from Reuters, CNBC, New York Post, and Forbes.

Amazon just put on a show for Wall Street. The stock jumped roughly 11%–12% on Friday after a blowout update from Amazon Web Services, a clean beat on profit and sales, and a confident holiday forecast that collectively quieted nerves about the company falling behind in the AI race.

The star was AWS. Cloud revenue reached $33 billion in the quarter, up 20% year over year — its fastest growth since 2022. Microsoft’s Azure and Google Cloud posted quicker percentage gains at 40% and 34%, but AWS’s sheer scale makes every growth point count, and its cloud sales are still more than double Google’s $15.16 billion. Most importantly for the bottom line, AWS generated $11.4 billion in operating income, which amounted to about two-thirds of Amazon’s total operating profit. CEO Andy Jassy said AWS is “growing at a pace we haven’t seen since 2022,” pointing to heavy demand for AI services and core infrastructure.

The rest of the business is pulling its weight. Companywide revenue came in at $180.17 billion, topping expectations, while earnings of $1.95 per share beat comfortably. Advertising stayed hot with $17.7 billion in sales, up 24% as Amazon keeps weaving ads into everything from Echo devices to shopping results. Retail grew around 10%–11% year over year, helped by July’s Prime Day.

Guidance was the other green light. For the current quarter, Amazon expects sales between $206 billion and $213 billion, with the midpoint landing above Wall Street’s view. On spending, Amazon joined the rest of Big Tech in dialing capex higher, lifting this year’s plan to about $125 billion and signaling even more in 2026. The money is going squarely into AI capacity — this week included the launch of Project Rainier, an $11 billion data center in Indiana, alongside a $5 billion data center push in South Korea.

The Street took the message as a turning point for AWS momentum. After months of fretting over share losses to Azure and Google, analysts said the quarter shows Amazon is firmly back in the AI slipstream. Valuation sits at a forward price-to-earnings ratio near 29.6 — above Alphabet but still shy of Microsoft — and the rally nudged Amazon’s year-to-date performance past Tesla and Apple, erasing its “Magnificent Seven laggard” tag.

There’s a harder edge to the story too. Amazon said it will cut 14,000 corporate roles as it tries to streamline layers and move faster after years of hypergrowth. Jassy framed the reductions as cultural rather than financially or AI driven “right now,” even as total headcount still ticked up 2% from a year ago to about 1.58 million employees.

Big picture, investors wanted proof that AI demand translates into real revenue and profit at Amazon’s scale. With AWS reaccelerating, ads compounding, retail steady heading into the holidays, and data-center spending aimed at next-gen compute, the company delivered. The question now isn’t whether Amazon is in the AI race — it’s how quickly it can turn this demand into durable margins.