Amazon Cloud Computing Results Lag Competitors' Gains

Amazon.com on July 31 forecast third-quarter sales above market estimates, but failed to live up to lofty expectations for its Amazon Web Services (AWS) cloud computing unit after rivals handily beat Wall Street forecasts.

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BENGALURU — Amazon.com on July 31 forecast third-quarter sales above market estimates, but failed to live up to lofty expectations for its Amazon Web Services (AWS) cloud computing unit after rivals handily beat Wall Street forecasts.

Shares plunged by more than 7 percent in after-hours trading. Both Google parent Alphabet and Microsoft posted big cloud computing revenue gains in July.

AWS profit margins also contracted. Amazon said they were 32.9 percent in the second quarter, down from 39.5 percent in 2023's first quarter and 35.5 percent a year ago. The second-quarter margin results were at their lowest level since the final quarter of 2023.

AWS represents a small part of Amazon's total revenue, but it is a key driver of profits, typically accounting for about 60 percent of overall operating income.

AWS reported a 17.5 percent increase in revenue to US$30.9 billion (S$40.1 billion), edging past expectations of US$30.77 billion. By comparison, sales for Microsoft's Azure rose 39 percent and Google Cloud gained 32 percent.