Amazon’s Third-Quarter Results Pushed by Cloud Dominance
Amazon’s AMZN third-quarter 2024 results, scheduled for release on Oct. 31, are expected to showcase the benefits of its cloud service growth.
AWS Continues to Thrive and Drive Revenue
Amazon Web Services (“AWS”), the company’s cloud computing arm, remains a leader in the industry due to its increased adoption and popularity. This trend is likely to be evident in the upcoming financial results.
Recent performance highlights AWS’s ability to provide high margins, supporting Amazon’s overall financial strength. In the second quarter of 2024, AWS generated revenues of $26.3 billion, which represented 18% of Amazon’s total sales and a 19% increase from the previous year. Operating income for AWS soared to $9.3 billion, up 74% year over year.
For the third quarter, the Zacks Consensus Estimate anticipates AWS sales to reach $27.5 billion, reflecting a 19.5% rise compared to the same period last year.
[Click here for a deeper dive into Amazon’s third-quarter performance expectations.]
Amazon.com, Inc. Price and EPS Surprise
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Key Factors Influencing AWS Growth
AWS is bolstered by a robust suite of cloud services and the expansion of generative AI capabilities, which are expected to enhance performance in the third quarter.
Recently, AWS made its AWS Parallel Computing Service generally available. This service allows customers to build scientific and engineering models while managing high-performance computing needs efficiently.
Additionally, Amazon introduced AWS GenAI Lofts, immersive spaces aimed at startups and developers, equipped with workshops and expert sessions to foster AI development.
AWS App Studio was also launched, a service leveraging generative AI to help non-developers create enterprise-level applications quickly and securely, which simplifies app development.
These advancements are expected to have attracted new customers to AWS in the third quarter. Collaborations with companies like Digital Domain, which is scaling its Autonomous Virtual Human Technology, demonstrate AWS’s commitment to innovation.
Central Japan Railway Company has started using AWS’s Internet of Things, machine learning, and generative AI services to enhance operations for its new high-speed train service.
Meanwhile, Gold Fields GFI transitioned its entire SAP and treasury systems to AWS, utilizing its analytics and machine learning solutions to upgrade their technology infrastructure.
Furthermore, AWS formed a partnership with GE HealthCare GEHC, granting them access to healthcare and generative AI services for improved medical diagnostics.
The increased use of Amazon Bedrock, an important AWS offering, signifies its success. AWS’s recent five-year partnership with Smarsh is focused on enhancing services for the financial sector by leveraging Amazon Bedrock.
With a growing customer base, AWS’s revenue growth is likely to remain strong and contribute positively to Amazon’s overall performance, helping it maintain its competitive edge against rivals such as Microsoft and Alphabet GOOGL.
Stay updated with the latest EPS estimates and surprises on Zacks Earnings Calendar.
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The views and opinions expressed herein reflect those of the author and do not necessarily represent those of Nasdaq, Inc.
