All three pillar businesses are making efforts, Amazon's Q3 performance exceeds expectations

According to Zhitong Finance APP, Amazon (AMZN.US) reported strong third-quarter results after U.S. stock market hours on Thursday. The data shows that Amazon's Q3 revenue grew by 11% year-on-year to $158.9 billion, exceeding market expectations; operating profit was $17.4 billion, higher than the market expectation of $14.7 billion.

Emarketer analyst Sky Canaves stated, "With strong performances in its three pillar businesses of e-commerce, advertising, and cloud services, Amazon's third-quarter results exceeded expectations."

The financial results indicate that Amazon CEO Andy Jassy's efforts to cut costs and streamline Amazon's logistics operations over the years have paid off. This has given him enough room to invest heavily in building new data centers to meet the surge in demand for artificial intelligence services. Amazon CFO Brian Olsavsky stated during the earnings call that Amazon expects to invest up to $75 billion in capital expenditures in 2024, most of which will be used for technological infrastructure. Jassy anticipates that the company's spending will be even higher next year.

Jassy described generative artificial intelligence as "a very large, perhaps once-in-a-lifetime opportunity. I believe our customers, businesses, and shareholders will be satisfied with our long-term goals because we are actively pursuing this objective."

Specifically, in the third quarter, the cloud computing division AWS saw revenue grow by 19% year-on-year to $27.5 billion, in line with market expectations. The revenue growth rate for this division has accelerated for five consecutive quarters.

AWS leads the cloud infrastructure market ahead of Google (GOOGL.US) and Microsoft (MSFT.US), making it an important source of profit for Amazon.

Google's parent company Alphabet announced on Tuesday that Google Cloud revenue, including cloud applications and infrastructure, was $11.35 billion, a 35% increase. Microsoft stated on Wednesday that revenue from Azure and other cloud services grew by 33%.

In the third quarter, AWS's operating profit was $10.4 billion, accounting for 60% of the parent company's profit. Analysts had an average expectation of $9.12 billion. AWS's operating profit margin reached 38%, the highest level since at least 2014. Google Cloud's operating profit margin was 17%.

Edward D. Jones & Co. analyst Brian Yarbrough remarked, "When Amazon talks about increasing spending, people often get a bit nervous, but they have a good track record of investing large sums of money and reaping substantial returns."

Additionally, Amazon's online store segment saw revenue grow by 7% year-on-year to $61.4 billion, while the thriving advertising segment's sales increased by 19% year-on-year to $14.3 billion Total operating expenses increased by 7.2% to $141.5 billion, marking Amazon's seventh consecutive quarter of revenue growth outpacing cost growth. The company’s full-time and part-time employee count rose by 3% to over 1.55 million.

Looking ahead, Amazon expects fourth-quarter revenue to reach as high as $188.5 billion, better than analysts' forecast of $186.4 billion; Amazon also anticipates fourth-quarter operating profit of about $18 billion, exceeding the analysts' average expectation of $17.5 billion.

After the earnings report was released, Amazon rose 5.8% in after-hours trading