Amazon shares soar on AI cloud computing boom

San Francisco, US – Amazon's shares soared by almost 10 percent on Thursday. The e-commerce giant announced better-than-expected earnings, driven by the growing demand for its AI cloud computing services.

Quarterly sales increased by 13 percent, reaching 180.2 billion dollars across the company, it reported. Net income rose to 21.2 billion dollars, up from 15.3 billion dollars the previous year.

In a boost for investors, the company forecasted fourth-quarter sales of between 206 billion and 213 billion dollars, representing growth of 10 to 13 percent.

This quarter, Amazon Web Services (AWS), the global leader in cloud services, reported revenues of 33 billion dollars, a 20 percent increase year-over-year. The division experienced a major global outage last week.

“AWS is growing at a rate we haven't seen since 2022, before the generative AI boom,” said chief executive officer Andy Jassy.

On Wednesday, its cloud competitors, Google and Microsoft, also reported solid progress in this rapidly expanding sector. This growth is driven by the demands of artificial intelligence (AI) for servers and data centres.

Although the company did not disclose its specific investment in AI capabilities, Amazon reported a year-over-year increase in property and equipment purchases of 50.9 billion dollars. This marks a significant increase in spending.

Amazon further indicated it added 3.8 gigawatts of energy capacity in the last year to support its AI infrastructure, more than any other cloud service provider. The company also launched a massive computing cluster with nearly 500,000 custom AI chips.

AI computing demands vast amounts of electricity, far more than traditional computing. It can also strain local resources, particularly the water supply needed to cool data centre operations.

On Tuesday, ahead of the results, Amazon also signalled a cost-saving plan by announcing the elimination of 14,000 office-based roles.

This initial wave could increase to 30,000 job cuts by January, according to US media. This represents nearly 10 percent of its 350,000 employees in support or strategic roles.

The group, including the significant workforce in its warehouses which are undergoing robotisation, employs more than 1.5 million workers worldwide. It is the second-largest employer in the US.

This article was translated to English using an AI tool.

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