Amazon shares jumped more than 11% in early trading Friday after the company’s cloud unit, Amazon Web Services (AWS), posted a sharp rebound in growth and offered a bullish sales outlook that eased concerns about its position in the artificial intelligence race.
The e-commerce and cloud computing giant reported that AWS revenue rose 20% in the third quarter — its fastest pace in nearly two years. Though the growth rate lagged behind Microsoft Azure’s 40% and Google Cloud’s 34%, AWS’s enormous scale magnified the result’s impact, with its $33 billion in revenue more than double Google Cloud’s $15.16 billion.
Wall Street analysts described the performance as a “turning point” for Amazon, suggesting that AWS — which had recently shown signs of slowing momentum — has now regained its footing.
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“There was definitely concern about AWS losing market share to Microsoft Azure and Google Cloud,” said Jed Ellerbroek, portfolio manager at Argent Capital. “But now AWS is aboard the train as well and they’re seeing a big revenue increase.”
Ellerbroek added that investors had expected AWS’s acceleration to come later, either in the fourth quarter or early next year.
“But it’s already come this quarter,” he said.
The result triggered a wave of optimism on Wall Street, helping Amazon’s stock outperform its peers for the first time this year. Before Friday’s surge, Amazon shares had gained just 1.6% year-to-date, making it the weakest performer in the “Magnificent Seven” — a group that includes Apple, Microsoft, Nvidia, Alphabet, Tesla, Meta, and Amazon. The latest rally pushed Amazon’s gains past those of Tesla and Apple, whose shares are up about 11% and 8%, respectively.
AWS, long seen as Amazon’s most profitable engine, has been at the center of investor concern amid a new wave of AI-driven competition from Microsoft and Google. Analysts say the strong quarter shows Amazon is no longer playing defense in the cloud and AI markets.
Chief Executive Andy Jassy said AWS is “growing at a pace we haven’t seen since 2022,” citing a surge in demand for both AI and core cloud infrastructure services. He noted that customers are increasingly adopting AWS’s machine learning tools and foundation models for enterprise applications — a sign that the company’s long-term AI bets are starting to pay off.
Like its Big Tech rivals, Amazon also signaled a plan to raise capital expenditures next year to meet rising AI demand. The company is building new data centers and accelerating investments in proprietary chips such as Trainium and Inferentia, which are designed to cut costs for large-scale AI workloads.
“Amazon delivered one of the strongest performances of this earnings season, quieting any lingering doubts about its ability to execute at scale,” said eToro market analyst Farhan Badami.
He added that Amazon’s renewed focus on AI has reassured investors who had worried the company was ceding leadership to Microsoft and Google.
Amazon’s valuation metrics also reflected renewed confidence. Its forward 12-month price-to-earnings ratio now stands at 29.63 — higher than Alphabet’s 25.98 but still below Microsoft’s 31.72, suggesting investors are optimistic about further upside.
Beyond the cloud business, Amazon’s retail and advertising segments also posted impressive results. The company’s core e-commerce operation grew 11% year-over-year, a performance analysts described as exceptional for a retailer of Amazon’s scale.
“Amazon’s retail results were very good,” said Ellerbroek. “They’re growing 11% year over year. Name me another big retailer in America growing that fast — they don’t exist.”
Meanwhile, advertising revenue climbed 24% to $17.7 billion, driven by Amazon’s expansion of ad placements across its ecosystem — from Echo devices and Fire TVs to grocery carts and sponsored listings on its marketplace.
The combined strength of AWS, advertising, and retail segments prompted at least 23 brokerages to raise their price targets for Amazon shares. Analysts say the results show the company’s AI and digital commerce strategies are beginning to reinforce each other, positioning Amazon for a stronger 2026.
Between AWS’s rebound, ad strength, and the company’s investments in generative AI infrastructure, this may be the moment Amazon regains its edge among the Magnificent Seven.