In the third quarter, Amazon reported earnings that exceeded expectations, with $158.9 billion in revenue, up 11% year-over-year, and earnings per share of $1.43. Profits increased to $15.3 billion from $9.9 billion in the previous year. Despite analysts’ predictions of $157 billion in revenue and earnings per share of $1.14, Amazon’s stock rose by 6% in after-hours trading, and is up more than 40% over the past 12 months. Amazon Web Services, the company’s cloud unit, met expectations with $27.4 billion in revenue, showing a 19% increase and contributing significantly to the company’s operating income of $17.4 billion in the first quarter.
The breakdown of Amazon’s financials for the third quarter showed that revenue from online stores was up 7% year-over-year, reaching $61.4 billion, including sales from Amazon’s Prime Day event in July. Amazon Web Services continued to be a strong revenue driver, with $27.4 billion in revenue, up 19%, and operating income of $10.4 billion, a 50% increase from the year before. The company’s advertising business brought in $14.3 billion in revenue, up 19% from last year, while revenue from third-party seller services increased by 10% to $37.8 billion. Amazon’s shipping costs totaled $23.5 billion in Q3, an 8% increase, and revenue from physical stores, including Whole Foods, reached $5.2 billion, up 5%.
Investors are closely monitoring the impact of AI adoption on cloud computing giants like Amazon, Google, and Microsoft, all of which reported strong results for their cloud units in the third quarter. Amazon is focusing on hiring, with 1.55 million employees as of the third quarter, a 3% increase from the previous year. The company aims to hire 250,000 U.S. workers by the 2024 holiday season and increase the ratio of individual contributors to managers in its corporate workforce, as indicated in a recent memo from CEO Andy Jassy. Subscription services revenue, which includes revenue from Prime memberships, reached $11.2 billion, up 11% from the previous year.
Looking ahead, Amazon forecasts fourth-quarter sales of $181.5 to $188.5 billion, with operating income expected to range between $16 billion and $20 billion. The company’s strong performance in the third quarter and positive outlook for the fourth quarter have contributed to the continued growth of its stock price, reflecting investors’ confidence in Amazon’s continued success and ability to navigate challenges in the competitive e-commerce and cloud computing industries. Overall, Amazon’s financial results for the third quarter demonstrate its resilience and adaptability in a rapidly evolving market, positioning the company for continued growth and success in the coming quarters.
