Amazon stock soars with the rise of cloud computing for AI

(AFP) Amazon shares soared nearly 10% on Thursday after the e-commerce giant announced better-than-expected earnings, driven by growing demand for its cloud computing services for AI.

Quarterly sales rose 13% to $180.2 billion companywide, Amazon reported. Net income rose to $21.2 billion from $15.3 billion a year earlier.

To encourage investors, the company forecasted fourth-quarter sales of between $206 billion and $213 billion, representing a 10% to 13% growth.

This quarter, Amazon Web Services (AWS), the world leader in cloud services, which suffered a major global outage last week, reported revenue of $33 billion, a 20% increase from the same period a year earlier.

"AWS is growing at a pace we haven't seen since 2022," before the generative AI boom, Andy Jassy, Amazon's chairman and CEO, said.

On Wednesday, its cloud competitors, Google and Microsoft, also published progress considered solid in this sector, which is experiencing full expansion, thanks to the growing needs of servers and data centers for artificial intelligence (AI).

Although the company did not break out its specific investment in AI capabilities, Amazon reported that it increased its year-over-year purchases of property and equipment by $50.9 billion, a significant increase in spending.

Amazon also stated that it added 3.8 gigawatts of power capacity in the last year to support its AI infrastructure, more than any other cloud service provider, and launched a massive computing cluster with nearly 500,000 custom chips for artificial intelligence.

AI computing demands significantly more electricity than traditional computing, and can put pressure on local resources, particularly in the water supply needed to cool data center operations.

On Tuesday, on the eve of the results, Amazon also signaled a savings plan by announcing the elimination of 14,000 positions at its offices.

A first wave, which could increase in January, is expected to result in the disappearance of 30,000 positions, according to various press reports, representing approximately 10% of the 350,000 employees in support or strategic functions.

The group, with its significant workforce of warehouses undergoing robotization, employs more than 1.5 million workers worldwide and is the second-largest employer in the United States.