Amazon's Q3 earnings have blown past expectations, sending its stock soaring! The tech giant reported stellar results, driven by impressive growth in its Amazon Web Services (AWS) cloud business. This news comes hot on the heels of similar announcements from rivals Microsoft and Google, who are also ramping up their investments in AI data centres.
AWS Fuels Amazon's Q3 Success
According to the earnings report, Amazon achieved an earnings per share (EPS) of $1.95 on a revenue of $180.2 billion, significantly exceeding analysts' predictions of $1.58 EPS and $177.8 billion in revenue. AWS alone generated a staggering $33.01 billion in revenue, surpassing the anticipated $32.4 billion. CEO Andy Jassy stated that the company will continue to aggressively invest in capacity to meet the rising demand.
AI Initiatives Driving Growth
Amazon is also making significant strides in the AI domain. The adoption of its Trainium2 AI chip has become a multi-billion dollar business, experiencing a remarkable 150% quarter-over-quarter growth. Furthermore, the company launched its Project Rainier AI cluster, equipped with 500,000 Trainium 2 chips, showcasing its commitment to advancing AI technology.
Amazon Still Trails Behind Competitors
Despite the positive results, Amazon's stock performance still lags behind Microsoft and Google. Year-to-date, Amazon's stock has climbed by a modest 2.4%, while Microsoft has surged by 24% and Google has jumped by 49%. This disparity is partly attributed to the perception that AWS isn't capturing as much of the AI market share as its competitors.
While Microsoft boasts OpenAI as a key AI client and Google has Gemini, Amazon relies on Anthropic for substantial AI exposure. However, this partnership is shared with Google, which also provides cloud computing services to Anthropic. Nevertheless, Amazon recently announced that Anthropic will utilize 1 million custom Amazon chips to train and run its AI models, marking a significant win for the company.
This positive news from Amazon indicates a strong future for the company, especially with its focus on cloud computing and artificial intelligence. Investors and analysts will be watching closely to see how Amazon continues to compete in these dynamic markets.