Amazon reports results: three engines drive profitable growth into the AI build out

Key takeaways

• Strong quarter with sales and profit beat. AWS margin up. Ads grew fast. Holiday guidance steady.
• AWS remains the profit swing factor, AI usage and margin expansion matter more than headline growth.
• Key risks: another AWS outage, power limits, or heavier promotions could hit margins and cash.

Amazon’s three engines keep turning

Investors wanted proof that Amazon could grow the parts that print cash. They got it. For the quarter to 30 September 2025, net sales were USD 180.2 billion versus USD 177.8 billion expected, while earnings per share were USD 1.95 versus USD 1.58 expected.

This came in a week when the mega-caps put numbers on the table and investors leaned toward growth over defence. For Amazon, the question was simple: did cloud, ads and delivery get stronger together? The short answer is yes, with a few caveats worth watching into the holidays.

Cloud: profitable growth, not just growth

Amazon Web Services, the cloud arm, delivered USD 33.0 billion of revenue, up 20.2 percent year on year, and USD 11.4 billion of operating income. That put the operating margin at 34.6 percent, firmer than recent quarters. Management said demand for artificial intelligence training and inference is flowing through, and flagged ongoing investments in chips, data centres and power capacity to support it. Watch billed usage, not just bookings.

Capacity still decides outcomes. Amazon highlighted a 3.8 gigawatt step-up in power over 12 months and continuing heavy capital expenditure to build AI-ready infrastructure. That spend weighed on free cash flow, which fell over the last year as property and equipment purchases surged. The trade-off is clear: build now to monetise AI later.

Ads: Prime Video turns attention into cash

Advertising services posted USD 17.7 billion, up 24 percent year on year. This remains Amazon’s quiet second engine. Sponsored products keep compounding, while Prime Video’s ad tier adds connected-TV reach on top of retail media.

Ads carry high margins and help fund logistics and cloud capex without stretching the income statement. Into Q4, look for updates on Prime Video ad load, live sport formats and shoppable video experiments.

Retail: faster speeds, steadier margins

Retail is about physics and patience. Same-day and next-day delivery continue to rise, supported by denser local nodes and more third-party sellers using ‘Fulfilment by Amazon’.

North America generated USD 4.8 billion of operating income, but excluding a USD 2.5 billion Federal Trade Commission settlement, it would have been USD 7.3 billion. International added USD 1.2 billion. Inventory discipline and routing efficiency are doing their job.

The cost side matters too. Amazon plans to cut about 14,000 corporate roles, including in gaming, framing it as simplification and speed. Fewer layers tend to reduce decision cycle times and protect margins when promotions rise into peak season.

Outage as a reality check

Two weeks ago, a major Amazon Web Services outage knocked parts of the internet offline. It was a reminder of concentration risk — and of AWS’s central role in global computing.

Synergy Research Group estimates AWS accounts for about 30 percent of global cloud infrastructure spending, ahead of Microsoft Azure and Google Cloud. When AWS sneezes, the web catches a cold. For customers, that argues for multi-region and multi-cloud redundancy. For Amazon, it underscores both power and responsibility.

Guidance and the holiday test

Management guided fourth-quarter net sales to USD 206–213 billion and operating income to USD 21–26 billion. The near-term test: keep retail margins steady while delivery speeds rise, let ads compound in the background, and continue translating AI workloads into AWS operating income. If that mix holds, the story shifts from good to durable.

What to watch in AI context

• AI usage, not just buzz. Comments on Bedrock, the Amazon Q assistant and newer data services sitting above raw compute are the best tells for monetisation.
• Capacity and power. Chip supply is improving, but grid connections and substation build-outs are now the gating factors. Amazon called out a large power ramp this year.
• Margin discipline. AWS margins at 34–35 percent calm nerves about AI capex. Ads help here, too.

Risks and early warning signs

• Softer cloud margins if price competition intensifies or AI projects slip. Watch AWS operating margin and deferred revenue trends.
• Weaker consumer demand or heavier promotions that dent retail profit. Monitor shipping cost per unit and inventory build on the call materials.
• Regulatory and legal drag. The USD 2.5 billion Prime settlement hit this quarter; more remedies could follow.
• Operational risk. Another large outage would re-ignite resilience questions for customers and regulators.

Can Amazon keep the rhythm?

Back to the simple test from the top. Cloud monetises AI. Ads monetise attention. Faster delivery monetises intent. This quarter, all three moved the right way. AWS margins held up as AI usage grew. Ads kept compounding. Faster delivery supported retail profit.

The setup is solid, though not risk free. Cloud margins could soften if pricing tightens or AI projects slip, yet rising usage and cost control help. Power and grid work may slow data centre builds. Retail faces demand and promotion risk, while ads can cool if budgets pause. Elevated spend keeps free cash flow sensitive. Let execution set the throttle, not promises.