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Amazon's cloud business reports 35% growth in the third quarter, trailing estimates

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Amazon Web Services saw a 35% revenue increase in Q3, which was less than analysts had expected.

from its Azure cloud on Wednesday, though the company doesn't disclose actual sales figures for the unit.

For the past four years, AWS has provided the bulk of Amazon's operating income. In the third quarter, AWS operating income totaled $2.26 billion, up 9% from the year-ago period and below the $2.55 billion FactSet consensus estimate. "Costs associated with building AWS marketing teams and greater infrastructure spending, relative to the prior year, will continue to work against margin in the back half of the year," Stifel analysts, who have a buy rating on Amazon stock, wrote in a note distributed to clients this week. "We expect AWS margin, which fluctuates from quarter-to-quarter, will be down y/y due to investment.

In the third quarter, AWS delivered 71% of Amazon's total operating income and 13% of its total revenue.

 

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