Amazon 3Q25 Quick Interpretation: Amid the current AI wave, the growth of cloud service businesses, including those of Amazon, Microsoft, and Google, is nearly the overriding core metric.
The most important reason for the significant rise in the company's performance this time is the long-awaited acceleration in AWS growth has finally arrived. Specifically:
1. AWS revenue for this quarter increased by 20.2% year-on-year, accelerating by 2.7 percentage points from the previous quarter. Although before the earnings release, some sell-side analysts and investors expected and anticipated an acceleration in AWS growth this quarter, setting the expected growth rate between 18% and 19%. The actual performance was even stronger.
Based on reports before the earnings release, this outperformance should be attributed to the alleviation of AWS's computing power supply bottleneck and the contribution to computing power demand from the collaboration with Anthropic.
2. As for the e-commerce segment, the performance was relatively stable. North American general retail business revenue grew by 11.2%, roughly flat compared to the previous quarter, in line with the trend of U.S. macro online data.
The international general retail business growth rate at constant exchange rates was 10%, slightly down by 1 percentage point from the previous quarter, also generally stable. Driven by the better-than-expected AWS and stable retail business growth, the company's total revenue for this quarter increased by 13.4% year-on-year, accelerating by 0.1 percentage points from the previous quarter, clearly outperforming the market expectation of 11.9%.
3. From a profit perspective, due to the confirmation of a $2.5 billion settlement payment with the U.S. Federal Trade Commission (FTC) this quarter, and the anticipated $1.8 billion compensation costs from previously reported layoffs being recognized in advance this quarter.
This resulted in the total operating profit for this quarter being $17.4 billion, nearly flat year-on-year, significantly below expectations. However, if the $2.5 billion legal fees are added back, the actual operating profit would be $19.9 billion, a 14% year-on-year increase, which is generally consistent with and slightly higher than market expectations.
4. By segment, AWS's operating profit was generally in line with expectations, but due to the increase in Capex and the impact of previously shortened depreciation periods for servers, the profit margin still declined year-on-year. The reported profit for the North American retail segment also appeared to decline year-on-year due to the aforementioned legal and anticipated compensation expenses.
However, if the $2.5 billion legal expenses are added back, the actual North American profit is also generally in line with expectations, with the profit margin continuing to rise by 1 percentage point year-on-year. Only the international retail segment's operating profit for this quarter was $1.2 billion, lower than the $1.3 billion in the same period last year, and significantly below expectations. According to the company, this was due to the aforementioned pre-recognized layoff costs.
5. Capex spending for this quarter was $35.1 billion, again increasing by about $3 billion from the previous quarter, also setting a new historical high, and exceeding market expectations by about 10%. This reflects the company's current multi-directional investments in AI cloud service centers, the Kuiper satellite project, and instant delivery in the retail business. $Amazon(AMZN.US)
