Amazon's third-quarter revenue rose 12% to $202 billion and operating margin reached 13.9%. Updated guidance was roughly in line with expectations, although the shares fell roughly 7% after hours.
AWS can turn demand for AI computing into durable earnings as new capacity comes online and custom chips improve cost efficiency.
Bears
AI equipment may become obsolete or face falling rental prices before Amazon earns an adequate return on its infrastructure investment. A lot rides on future AI demand.
Amazon.com operates an online marketplace, sells merchandise directly, and provides fulfillment and advertising services to merchants and brands. Prime combines delivery benefits with digital content to encourage repeat purchases. Amazon Web Services supplies computing, storage, databases, and artificial intelligence services. The company reports North America, international, and AWS segments; advertising and subscriptions are included within the geographic segments. AWS accounts for roughly one-fifth of revenue and the majority of operating income.