Amazon's cloud-computing unit reported third-quarter revenue of $45.98 billion, representing 39% year-over-year growth and exceeding the $45.29 billion consensus among analysts polled by StreetAccount, according to a company statement. The growth rate marks AWS's highest since the fourth quarter of 2021, accelerating from approximately 37% growth in the second quarter. AWS CEO Andy Jassy attributed the acceleration to rapid expansion in the company's core compute and storage services.
The AWS segment generated $17.77 billion in third-quarter operating income, up 55% compared with analyst expectations of $16.97 billion. AWS now accounts for almost 23% of Amazon's total revenue, a record proportion. Jassy expressed confidence about future expansion, stating that AWS could grow above 40% annually in both 2027 and 2028, and become a trillion-dollar revenue business within five to 10 years.
AWS remains the largest cloud provider by revenue, but competitors are closing the gap. Microsoft's Azure is now 72% the size of AWS, up from 58% two years ago, according to Microsoft's first earnings report containing Azure revenue in dollars. Alphabet reported that its Google Cloud business, which includes infrastructure and Google Workspace subscriptions, more than doubled in the third quarter. All three major cloud providers have been aggressively expanding data center capacity to accommodate surging demand for artificial intelligence applications.
During the quarter, AWS announced plans to expand its portfolio of Nvidia graphics processing units for AI workloads, acquired data analysis startup DuckLabs, and signed deals with Meta and OpenAI, according to the company statement. AWS also announced plans to make its Trainium chips available for external customers starting in late 2027, mirroring a strategy Google has employed with its tensor processing units for AI. Jassy said customer demand for Trainium had been strong and customers were requesting external access to the technology.
For US investors and businesses, AWS's accelerating growth and expanded operating income suggest the cloud computing sector remains a significant driver of Big Tech profitability and capital expenditure, while for enterprises considering cloud deployment decisions, the competitive intensity between AWS, Azure and Google Cloud means pricing pressure and innovation will likely continue.