SEATTLE — Amazon reported one of its strongest earnings in years, with revenue and profit rising in both its retail and cloud segments. Shares jumped 13% in after-hours trading after the results, just days after the company announced widespread layoffs affecting 14,000 corporate employees. CEO Andy Jassy said the layoffs were cultural, not financial, even as Amazon continues investing heavily in artificial intelligence infrastructure.
Retail and Advertising Keep Momentum
Amazon’s core retail and advertising businesses set a strong tone for a powerful quarter. The company announced record-breaking sales during its annual Prime Day event in July, stating that core e-commerce sales increased by 10% year over year, indicating ongoing consumer engagement despite economic challenges and trade tensions.
Advertising also proved to be a major driver, increasing 24% to $17.7 billion, driven by higher monetization across sponsored product listings, video platforms, and in-store media, including smart shopping carts and Echo devices. These increases highlight Amazon’s growing role as a performance-marketing platform for brands and third-party sellers.
Looking ahead, Amazon expects fourth-quarter revenue to be between $206 billion and $213 billion, roughly aligning with analyst forecasts as it approaches the critical holiday shopping season.
AI Demand Drives Record Cloud Results
While retail and advertising provided stability, Amazon’s cloud division sparked growth. Amazon Web Services (AWS) experienced its fastest expansion since 2022, with revenue increasing 20% to $33 billion, significantly exceeding expectations and contributing to overall company revenue growth of 13% to $180.2 billion. Net income jumped nearly 40% to $21.2 billion, also surpassing estimates.
Jassy credited the resurgence to rapid adoption of AI technologies: “AWS is growing at a pace we haven’t seen since 2022,” he said. “We continue to see strong demand in AI and core infrastructure, and we’ve been focused on accelerating capacity.”
The rebound reassured investors who had been worried that AWS was losing ground to Microsoft Azure and Google Cloud. Instead, Amazon significantly expanded its data center footprint, adding 3.8 gigawatts of computing power in the past year to handle rising AI workloads.
Record Capital Spending Reflects an AI Arms Race
Amazon’s investment trend remains steep. The company spent $34.2 billion this quarter on chips, servers, and data centers, bringing its year-to-date capital expenditures to nearly $90 billion and increasing its full-year forecast to approximately $125 billion.
That pace keeps Amazon ahead of competitors in the AI race. Along with Google, Meta, and Microsoft, Big Tech invested over $110 billion in data infrastructure this quarter alone. Amazon acts as both the primary cloud provider and a significant investor in Anthropic, the creator of the Claude chatbot, while also developing its own Trainium AI chips to reduce long-term operating expenses.
Jassy said these investments are vital to maintaining the company’s leadership in AI-driven computing power. “We’re building capacity for the next generation of applications,” he said.
Layoffs Follow Record Growth
Despite strong results, Amazon announced plans to cut 14,000 corporate jobs as part of a broader restructuring that could ultimately impact around 30,000 positions. The company recorded a $1.8 billion severance charge this quarter.
Jassy framed the move as a recalibration rather than a retrenchment: “It’s not really financially driven, and it’s not even really AI-driven — it’s culture. If you grow as fast as we did for several years, you end up with a lot more layers, and it can slow you down.”
The reductions reflect trends across the tech industry, where companies are cutting bureaucracy while shifting talent toward AI, automation, and product innovation. Amazon’s total workforce still increased by 2% year over year to 1.58 million employees, showing ongoing hiring in fulfillment and retail.
AWS Rebounds After Outage
The quarter’s momentum persisted despite an AWS outage just 10 days before earnings, which temporarily disrupted several prominent websites and apps. The incident highlighted AWS’s key role in global internet infrastructure — and its resilience.
The division now accounts for 15% of Amazon’s total sales but about 60% of its operating income, acting as the company’s profit engine and the basis for its AI growth.
Looking Ahead
Amazon’s latest results showcase a company operating at full speed: retail and advertising growth fuel short-term strength, while significant investments in AI and cloud computing shape its long-term outlook.
Analysts say the performance “reaffirms Amazon’s fundamentals and positions it as a long-term winner in the AI infrastructure race.” But the dual headlines — soaring profits and sweeping layoffs — highlight the tensions of Big Tech’s next phase: a push for agility and innovation amid unprecedented transformation.
As Jassy put it, “We want to operate like the world’s largest start-up.” For Amazon, that means running faster — even when it means running leaner.
