Amazon on cloud nine: Here’s what driving e-commerce giant’s Q3 profits

Amazon’s rise to cloud: For the quarter ending September 30, 2024, Amazon has reported a 55 per cent rise in quarterly profits with a bottom line of $15.3 billion in the third quarter. This is a substantial upside from the $9.9 billion earned by the e-commerce giant same quarter last year (Q3FY24). 

As the company shared the earnings for the quarter, its shares surged over 6 per cent to settle at $197.93 apiece on the last trading session of the week. 

The key reason behind this rise in the company’s quarterly numbers is its robust growth in the cloud computing business with Amazon Web Services (AWS), the cloud business arm of Amazon, posting an operating income of $10.4 billion, up by nearly 50 per cent on a year-on-year basis.

The role of this revenue in Amazon’s overall income can be estimated by the fact that AWS alone contributed 60 per cent of the operating income of its parent company, adding to both its top-line and bottom-line numbers. 

“We have seen significant reacceleration of AWS growth for the last four quarters. AWS’s AI business is a multibillion-dollar revenue run rate business that continues to grow at a triple-digit year-over-year percentage and is growing more than three times faster at this stage of its evolution as AWS itself grew, and we felt like AWS grew pretty quickly,” said Andy Jassy, CEO & President, Amazon. 

Jassy also shared that Amazon Web Services is facing more demand than it can cater to right now and the company will be looking forward to increasing its capacity with an improved supply of chips. 

Amazon leads cloud infra market

Amazon continues to lead the cloud infrastructure market, closely followed by Microsoft and Google . As of the second quarter of 2024, Amazon held a 32 per cent market share, with Microsoft at 23 per cent and Google at 12 per cent, according to Synergy Research Group.

Alphabet recently reported a 35 per cent year-on-year revenue increase for Google ’s cloud business, reaching $11.3 billion in the third quarter of FY24. Meanwhile, Microsoft announced that revenue from Azure and other cloud services grew 33 per cent in the first quarter of FY25. Both companies attribute this robust cloud revenue growth to the rising adoption of artificial intelligence.