Amazon’s Q3 Earnings Surpass Expectations
Amazon shares surged over 13% in after-hours trading following the release of its third-quarter 2025 earnings report, which exceeded Wall Street expectations. The company reported earnings per share (EPS) of $1.95, significantly above the $1.57 consensus estimate, while revenue reached $180.17 billion, compared with the $177.8 billion forecast.
- Amazon Web Services (AWS) generated $33 billion in revenue, surpassing the $32.42 billion estimate.
- Advertising revenue totaled $17.7 billion, exceeding the $17.34 billion expected.
AWS revenue growth accelerated to 20.2% year-over-year, outpacing the anticipated 18.1%. This marks a notable rebound for the division amid intensifying competition from Google Cloud and Microsoft Azure, which reported growth rates of 34% and 40%, respectively, in the same quarter.
AWS Growth Fueled by AI Demand and Infrastructure Expansion
Amazon CEO Andy Jassy stated, “AWS is growing at a pace we haven’t seen since 2022,” highlighting robust demand for artificial intelligence and core infrastructure services. The company has expanded capacity by over 3.8 gigawatts in the past year.
Despite AWS’s strong performance, Amazon faces skepticism about capturing lucrative AI cloud contracts, which has affected its stock performance relative to other leading tech firms. To bolster its AI capabilities, Amazon recently launched Project Rainier, an $11 billion AI data center dedicated to running models from Anthropic’s Claude chatbot.
Capital Expenditure Outlook Raised Amid Expansion
Amazon increased its 2025 capital expenditure forecast to $125 billion from the prior estimate of $118 billion, signaling ongoing investments in infrastructure and technology. CFO Brian Olsavsky indicated that spending is expected to rise further in 2026.
Q4 Revenue Guidance and Operating Income Expectations
For the current quarter, Amazon anticipates revenue between $206 billion and $213 billion, with the midpoint of $209.5 billion slightly above analyst forecasts of $208 billion. Operating income guidance ranges from $21 billion to $26 billion, compared to the $23.8 billion consensus.
Corporate Restructuring and Workforce Reductions
In a strategic move to streamline operations, Amazon announced the layoff of approximately 14,000 corporate employees. CEO Andy Jassy emphasized that the decision was driven by cultural and organizational considerations rather than financial pressures or AI-related changes.
Jassy explained, “As we grow rapidly, layers accumulate, and we need to simplify to maintain agility and efficiency.” The company aims to reduce bureaucracy and accelerate decision-making processes.
Amazon’s total workforce stood at roughly 1.58 million employees at quarter-end, marking a 2% increase year-over-year despite the layoffs.
Operating Income and One-Time Charges
Operating income remained flat at $17.4 billion year-over-year. This figure incorporates a $2.5 billion settlement with the Federal Trade Commission over deceptive Prime signups and approximately $1.8 billion in severance costs related to planned role eliminations.
AI Integration Across Business Units
Amazon continues to integrate AI technologies across its retail, cloud, devices, and advertising segments. Notable launches include Q, a chatbot for businesses; Bedrock, a generative AI cloud service; and Rufus, a shopping assistant chatbot that has engaged 250 million users this year, increasing purchase likelihood by 60%.
Retail Unit Shows Steady Growth
Amazon’s core online stores experienced a 10% sales increase during the quarter, benefiting from the Prime Day event in July. The company continues to navigate uncertainties related to trade policies and tariffs, which remain potential factors affecting future guidance.
FinOracleAI — Market View
Amazon’s third-quarter results and revised capital expenditure guidance underscore its commitment to maintaining leadership in cloud infrastructure and AI innovation. The accelerated AWS growth and AI-focused investments position the company to capitalize on emerging opportunities despite intensifying competition.
- Opportunities: Expansion of AI-driven cloud services, leveraging Project Rainier and Anthropic partnership.
- Risks: Competitive pressure from Google and Microsoft’s rapidly growing cloud platforms.
- Operational Efficiency: Workforce reductions aimed at streamlining decision-making and improving agility.
- Market Uncertainty: Potential impact of tariffs and trade policies on supply chain and costs.
Impact: Amazon’s strong Q3 performance combined with increased capital investment signals robust growth prospects, though competitive and geopolitical risks warrant close monitoring.
