Amazon’s AWS Cloud Business Sees Unprecedented Growth Fueled by Rapid AI Adoption and Innovation
Amazon’s stock price surged nearly 12% in premarket trading on Friday, October 31, 2025, after the e-commerce giant reported stellar growth in its cloud unit, Amazon Web Services (AWS). The strong performance, coupled with a bullish sales outlook, has eased fears that Amazon was falling behind its rivals in the AI race. But can AWS sustain its growth momentum?
AWS: A Key Growth Driver
AWS, the hub of Amazon’s recent AI investments, reported a 20% year-over-year revenue growth in the third quarter, reaching $33 billion. While this pales in comparison to Microsoft Azure’s 40% growth and Google Cloud’s 34% growth, analysts believe the rebound marks a potential turning point for Amazon. The company’s quarterly cloud revenue is more than double that of Google’s $15.16 billion, demonstrating its dominance in the market.
According to Jed Ellerbroek, portfolio manager at Argent Capital, “There was definitely concern about AWS losing market share to Microsoft Azure and Google Cloud, but now AWS is aboard the train as well and they’re seeing a big revenue increase.” This sentiment is echoed by CEO Andy Jassy, who stated that AWS is “growing at a pace we haven’t seen since 2022,” citing strong demand for AI and core infrastructure.
Retail and Advertising: A Strong Supporting Act
Amazon’s retail and advertising businesses also delivered impressive performances. Retail revenue rose 11% year-over-year, outpacing most large U.S. peers, while advertising sales jumped 24% to $17.7 billion. The company’s ability to expand ad placements across Echo devices, grocery carts, and sponsored listings has helped boost margins and diversify revenue.
As Ellerbroek noted, “Amazon’s retail results were very good. They’re growing 11% year over year. Name me another big retailer in America growing that fast – they don’t exist.” This growth is a testament to Amazon’s ability to adapt and innovate in a rapidly changing market.
Can AWS Sustain Its Growth?
While AWS’s growth is a positive sign for Amazon, investors will be watching closely to see if the company can sustain its momentum. The company’s forward 12-month price-to-earnings ratio recently stood at 29.63, surpassing Alphabet’s 25.98 but trailing Microsoft’s 31.72. With increased capital spending forecasted over the next year, Amazon’s ability to balance growth with profitability will be under scrutiny.
As the AI landscape continues to evolve, Amazon’s ability to innovate and stay ahead of the competition will be crucial to its success. With its strong cloud infrastructure and growing AI capabilities, AWS is well-positioned to remain a key growth driver for the company. However, the question remains: can AWS sustain its growth momentum and take on the likes of Microsoft Azure and Google Cloud?
The Verdict
Amazon’s strong Q3 earnings and bullish sales outlook have sent a positive signal to investors, who are eager to see the company regain its footing in the AI race. While challenges lie ahead, AWS’s growth momentum is a promising sign for the company’s future prospects. As the tech giant continues to innovate and expand its offerings, one thing is clear: Amazon is back in the game.
