Amazon stunned Wall Street this week with quarterly results that showcased both the scale of its cloud recovery and the speed of its transformation into an AI infrastructure powerhouse.
Shares surged more than 13% in after-hours trading after the release, marking one of the strongest reactions to an Amazon earnings report in years.
A Rebound Built on Cloud and Code
Revenue in the September quarter climbed to $180.2 billion, a 13% increase from a year earlier. But the real story was earnings per share hitting $1.95, far above analysts’ $1.57 estimate — a sign that Amazon’s cost-cutting drive and AI expansion are paying off simultaneously.
At the center of this resurgence is Amazon Web Services (AWS), which generated $33 billion in quarterly sales, up 20% from last year and ahead of Wall Street projections. CEO Andy Jassy said AWS hasn’t grown this fast since 2022, crediting soaring demand for AI training infrastructure and the company’s decision to add 3.8 gigawatts of new data capacity over the past 12 months.
Advertising also played a major role in the quarter’s outperformance, with $17.7 billion in ad revenue slightly topping forecasts. Meanwhile, the e-commerce business showed unexpected strength — sales rose 10%, proving that consumers are still spending through the platform despite global trade uncertainties.
Project Rainier: Amazon’s $11 Billion AI Bet
The company’s next growth chapter is being written inside massive data halls. On Wednesday, Amazon officially unveiled Project Rainier, a $11 billion AI data center dedicated to running and training models from Anthropic, the developer behind the Claude chatbot.
It’s one of Amazon’s most ambitious infrastructure projects ever, part of an $8 billion partnership that will see Anthropic deploy one million Trainium2 chips by the end of 2025. The move positions Amazon directly against Microsoft’s OpenAI alliance and Google’s parallel deal with Anthropic.
To keep pace, Amazon has launched several of its own AI products:
Q, an enterprise chatbot for business clients.
Bedrock, a generative AI platform integrated into AWS.
Rufus, a retail assistant that reached 250 million users this year — and reportedly makes shoppers 60% more likely to complete purchases.
Leaner, Faster, and Focused on AI
Even as Amazon spends billions on cloud infrastructure, it’s trimming overhead elsewhere. The company announced 14,000 corporate layoffs, part of a restructuring effort designed to eliminate bureaucracy and accelerate AI product development.
Those cuts added $1.8 billion in severance costs this quarter, contributing to flat operating income of $17.4 billion compared to last year. The results also absorbed a $2.5 billion settlement with the FTC over Prime subscription practices — a one-time charge that masked what might have otherwise been record operating profits.
Despite these hits, Amazon’s total headcount actually rose 2% to 1.58 million, signaling that most reductions targeted non-core management roles rather than growth units like AWS or advertising.
Outlook and Uncertainty
For the December quarter, Amazon expects revenue between $206 billion and $213 billion, exceeding most analyst forecasts. The company also projected operating income up to $26 billion, suggesting confidence heading into the holiday season — traditionally Amazon’s strongest period.
However, CEO Jassy warned that tariffs and shifting U.S. trade policies under President Donald Trump could alter consumer pricing dynamics in 2026. He said no immediate impact has been felt, but emphasized that “macroeconomic volatility remains on the radar.”
Cloud Wars: Amazon Fights to Stay Ahead
The bigger story is how Amazon fits into the escalating AI infrastructure race. Despite an AWS outage earlier this month that disrupted several major websites, Amazon continues to hold the top position in global cloud share.
Still, competition is tightening. Microsoft Azure’s 40% growth and Google Cloud’s 34% expansion highlight how quickly rivals are catching up — both fueled by AI-driven enterprise demand.
Amazon’s answer: scale bigger, build faster, and integrate AI into every corner of its ecosystem. With Project Rainier now online, Anthropic’s partnership deepening, and new AI products rolling out across cloud and retail, the company is betting its next decade of growth on one conviction — that the future of shopping, computing, and enterprise services will all run on its cloud.
Whether this massive transformation keeps Amazon ahead of its rivals remains to be seen. For now, Wall Street’s reaction says it all — investors like the new Amazon.
