Amazon Shares Soar 11% On Its Strongest Quarter as AWS Reignites Growth and Reclaims Its AI Edge

AMZN Growth Story Isn’t Over Yet, AWS Just Proved It

Amazon delivered an exceptional third quarter, with shares jumping 11% after hours to around $249. What stood out most this quarter was how quickly investor sentiment toward AWS turned around. Many had questioned whether Amazon’s cloud business could reaccelerate, but these results painted a very different picture.

Net sales climbed to $180 billion, up 13% year over year, driven by solid performances across all segments. North America generated $106 billion, up 11%, while international revenue rose 14% to $40 billion. The real highlight, however, was AWS, which posted a strong 20% growth rate, its best performance in several quarters. This kind of momentum suggests that demand for AI infrastructure is not just holding up but expanding rapidly, as more enterprises shift their workloads to the cloud to power AI applications.

Overall, this quarter didn’t just beat expectations; it helped restore confidence that Amazon’s growth story is very much alive, with AWS once again leading the charge.

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Amazon’s Profitability Holds Firm Despite One-Off Charges, Highlighting Strong Underlying Margins

When looking at Amazon’s profitability this quarter, it’s clear this remains one of the most important areas for investors to watch. The company is entering a more mature stage of its growth cycle, which means improving profitability is essential. Stronger earnings not only reflect better operational discipline but also give Amazon more flexibility to reinvest in innovation and infrastructure without relying on additional debt, a key step toward self-sustaining growth.

Operating income came in at $17.4 billion, roughly flat from the prior quarter. However, this figure includes two one-off expenses: a $2.5 billion FTC legal settlement and $1.8 billion in severance costs. Excluding these items, operating income would have been closer to $21.7 billion, representing 25% growth year over year.

Because of these charges, Amazon’s operating margin slipped to 9.7%, down from 11%. But importantly, this decline does not signal any structural weakness in the company’s profitability model. In fact, excluding these one-time costs, the results show that Amazon’s ongoing investments in AI and AWS are starting to deliver higher-margin returns. Still, investors should continue monitoring large, irregular expenses that can temporarily mask the company’s true earnings power.

Amazon’s Profits Surge 35%, but Heavy Reinvestment Signals a Long-Term Growth Play

Amazon’s net income rose 35% in the quarter, but it’s important to understand what drove that increase. About $9.5 billion of the profit came from Amazon’s unrealized gain on its investment in Anthropic. In simple terms, the value of Amazon’s stake in the AI company went up, but the company hasn’t actually sold those shares, meaning this gain exists only on paper. While it boosts reported earnings, it doesn’t reflect the underlying performance of Amazon’s core operations, which continue to be the real driver of long-term value.

Looking ahead, AMZN growth story is clearly being fuelled by an aggressive reinvestment strategy. The company’s capital expenditure reached an astounding $115 billion this quarter, up 78% year over year, underscoring that Amazon is not slowing down its push to expand capacity. Most of this spending is being directed toward cloud infrastructure, with Amazon adding 3.8 gigawatts of capacity more than any other hyperscaler in the industry.

As a result, free cash flow fell 69% to $14.8 billion, which tells investors that Amazon remains fully committed to heavy spending today to secure future growth. The key question will be whether this level of investment translates into long-term value and higher returns, but so far, the early signs are promising.

Relentless Push for AI and Cloud Dominance

Research and development spending also climbed 30%, driven by ongoing work in AI model training, custom chip development, and next-generation cloud services. Amazon’s in-house chips, known as Trainium2, saw demand surge 150%, evolving into a multi-billion-dollar business. The company also launched Project Rainier, a massive 500,000-chip AI cluster built to power Anthropic’s Claude models, one of the largest AI compute projects in the world.

Beyond infrastructure, AMZN Bedrock platform continues to strengthen its position as a multi-model AI marketplace. By integrating models from Anthropic (Claude), OpenAI, DeepSeek, and Qwen, Bedrock allows businesses to access a range of leading AI systems through AWS. This flexibility gives Amazon a unique edge, positioning it as a central player in the rapidly expanding AI ecosystem.

The Investors’ Takeaway For AMZN

For investors wondering whether Amazon remains a good investment, the key will be whether the company can maintain the kind of momentum seen this quarter. Management expects fourth-quarter revenue to come in between $206 billion and $213 billion, with operating income projected at $21–26 billion.

CEO Andy Jassy highlighted three main drivers behind that outlook: the acceleration of AWS growth, rising demand for AI infrastructure, and ongoing efficiency gains across Amazon’s fulfillment network. The company also continues to enhance its logistics capabilities, aiming to deliver record-speed Prime shipments and expand same-day grocery delivery to 2,300 communities by the end of the year.