AWS Revenue Jumps 39%, but Amazon Falls Into Cash Flow Deficit on AI Spending
IT DAILY ·
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Amazon said its total revenue for the third quarter rose 12% year over year to USD 201.9 billion.
AWS third-quarter revenue rose 39.3% to USD 45.98 billion, and operating profit increased to USD 17.77 billion.
Amazon said its trailing 12-month free cash flow turned negative at USD 42.4 billion amid expanded investment in data centers and AI infrastructure.
Amazon said on the 29th, local time, that its total revenue for the third quarter rose 12% year over year to USD 201.9 billion. In the same period, AWS posted third-quarter revenue of USD 45.98 billion, or about KRW 61.5 trillion, up 39.3%. AWS operating profit also rose to USD 17.77 billion, or about KRW 23.7 trillion, from USD 11.4 billion, or about KRW 15.2 trillion, a year earlier.
In particular, AWS posted 39% revenue growth in the third quarter, marking its fastest growth in five years. The increase reflected the expansion of its cloud business driven by AI demand, and AWS's quarterly revenue growth rate rose from 37% in the second quarter. Amazon said AI demand pushed AWS's growth rate higher, resulting in an increase even from the previous quarter.
Amazon, however, expanded investment in data centers and AI infrastructure. As a result, free cash flow over the trailing 12 months turned negative at USD 42.4 billion. USD 42.4 billion is about KRW 56.7 trillion.
Amazon said operating cash flow over the trailing 12 months came to USD 168.3 billion, up 29% from a year earlier, but free cash flow over the same period swung from a USD 14.8 billion surplus to a USD 42.4 billion deficit. Free cash flow is a measure that subtracts capital expenditures and other items from cash generated by operations. The figure is based on the trailing 12 months through the end of September, not a single third quarter. Net investment, excluding proceeds from asset sales and incentives from purchases of real estate and equipment, rose by USD 94.8 billion from a year earlier, and Amazon pointed to the increase in net investment as the main cause of the free cash flow deficit. Amazon also said most of the increase in net investment was driven by AI spending.
Amazon's capital expenditure outlook for this year stands at about USD 220 billion. Andy Jassy, Amazon's CEO, said capital expenditures next year will be significantly higher than this year, but did not disclose a specific figure. Reuters reported that Amazon's capital expenditures in the third quarter were USD 77.26 billion.
Amazon said its high AWS growth outlook is paired with investment pressure. According to Amazon's announcement, AWS's annualized revenue run rate is USD 184 billion. Amazon projected that AWS revenue growth in 2027 and 2028 will exceed 40%. Amazon said infrastructure investment to meet customer demand will translate into revenue and cash flow in the future. Amazon forecast fourth-quarter revenue at USD 240–247 billion.
The market is watching both this growth outlook and the pace of investment recovery. The key points to watch are whether AWS growth will continue and whether AI infrastructure spending is justified. Another point of interest is whether capital expenditures will translate into actual improvements in profitability and cash flow.
Source: IT DAILY · Lee Jae-young
Original: https://www.itdaily.kr/news/articleView.html?idxno=242577
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Source: IT DAILY
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