Amazon Web Services CEO Matt Garman speaks during CNBC Power Lunch on July 1, 2024.
CNBC
Amazon said Thursday that revenue in its cloud division increased 19% in the second quarter, beating analysts’ estimates.
The company reported revenue for Amazon Web Services of $26.28 billion. Analysts surveyed by StreetAccount had expected $26.02 billion.
AWS is growing faster than Amazon as a whole, though the company is facing intensifying competition from Google, Microsoft and Oracle, as more businesses shift workloads to the cloud and bolster their investments in artificial intelligence.
Amazon said in May that Matt Garman would be taking over as CEO of AWS, replacing Adam Selipsky, who was promoted to the position when Andy Jassy was named Amazon CEO in 2021. Garman previously ran sales, marketing and global services, and before that, was vice president in charge of compute services, including EC2, which provides raw computing resources for software developers.
While AWS continues to lead the cloud infrastructure market, Microsoft Azure and Google Cloud have been gaining momentum, due in part to early deployments of AI models. On Tuesday, Microsoft said revenue from Azure and other cloud services jumped 29% in the quarter, and last week Google said its cloud revenue, including cloud infrastructure and Workspace productivity subscriptions, also rose 29%.
Companies have started consuming cloud services to deploy generative AI models that power technologies such as OpenAI’s ChatGPT chatbot. Similar to other cloud providers, Amazon has said it will meaningfully increase capital spending in 2024. A big chunk of that will go toward snapping up Nvidia graphics processing units, or GPUs, for training and running generative AI models, with the bet that many billions in revenue will follow.
AWS now accounts for 18% of its parent company’s total revenue. When it comes to profit, AWS is far more critical.
Amazon said AWS generated $9.3 billion in quarterly operating income, or 63% of the companywide total. Analysts polled by StreetAccount had been looking for $8.51 billion in AWS operating income.
