Amazon shares surged nearly 9% within a week of its latest earnings report, extending a 31% gain over the past year.
The strong results reignited investor confidence but the real story goes beyond quarterly numbers to Amazon’s growing role at the center of the AI boom.
Key Points
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Amazon’s earnings beat was impressive, but its expanding AI infrastructure, from Trainium2 chips to the Bedrock platform and Anthropic partnership, is the real growth driver.
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AI powers both AWS and e-commerce, boosting efficiency, margins, and Amazon’s already dominant competitive moat.
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Despite a premium valuation, Amazon’s scale, 30% cloud share, and rising AI profitability make it a durable long-term winner.
The Earnings Catalyst
In Q3, Amazon’s revenue climbed to more than $180 billion, while net income jumped to $21.2 billion, easily topping estimates.
AWS led with 20% growth, and e-commerce sales rose 11% in North America and 14% internationally.
Yet what truly excited investors was how deeply AI is now embedded in Amazon’s growth strategy.
Amazon’s AI Advantage
Through Project Rainier, Amazon has deployed roughly half a million of its custom Trainium2 chips, aiming for more than 1 million by late 2025.
These chips are said to deliver up to 40% better price-performance than GPU-based systems. AWS has also partnered with Anthropic, maker of the Claude AI model, solidifying its status as the backbone of modern AI training.
Rather than competing to build a single model like OpenAI or Google, Amazon’s Bedrock platform lets customers tap into multiple AI models, a diversified approach that captures value across the entire ecosystem.
Two Growth Engines
Amazon’s AI capabilities don’t just serve AWS clients, they’re reshaping its retail operations.
The company’s machine-learning recommendation engine now influences an estimated one-third of sales, while AI tools are streamlining logistics, robotics, and delivery routes.
This “build and deploy” loop, selling compute while applying it internally, gives Amazon a dual profit engine few can match.
Margins, Scale, and Outlook
AWS contributes roughly 60% of Amazon’s operating profit, and as it scales, margins expand quickly. With much of its logistics network already built, incremental growth should require less spending.
Management expects Q4 revenue growth of as much as 13% and raised 2025 CapEx guidance to $125 billion, more than Microsoft or Alphabet plan to spend on AI infrastructure.
Should Investors Still Buy?
At about 37× earnings and 3.9× sales, Amazon isn’t cheap, but it offers durable moats: a 30% global cloud share, rapid AI monetization, and expanding margins.
Analysts’ consensus target of almost $290 implies roughly 13% upside. AWS’s share has slipped from half the market 7 years ago to under 39%, but Amazon’s massive e-commerce base gives it resilience if AI valuations cool.
Now What?
Amazon is no longer just a retailer, it’s an AI infrastructure powerhouse with unmatched scale.
Its strategy of building the tools that power AI while using them internally could sustain years of profitable growth.
The stock may not be a bargain, but for long-term investors, it remains one of the market’s most balanced plays on both e-commerce and artificial intelligence.