Amazon juggernaut continues hauling in more cash despite recent bad news

Summary

Amazon reported Q3 results that mostly beat expectations and sent the stock up more than 13% after hours. AWS remains the growth engine, delivering $33bn in sales and 20% year‑on‑year revenue growth, though that pace trails Azure and Google Cloud which are growing faster off smaller bases.

Amazon announced a reduction of 14,000 roles with $1.8bn of estimated severance, while free cash flow plunged to $14.8bn from $47.8bn a year ago — largely because the company sharply increased capital spending. Capex for the quarter was $34.2bn and 2025 capex guidance sits around $125bn, with 2026 expected to rise further as Amazon ramps AI infrastructure and data‑centre builds.

The firm highlighted investments tied to AI: a pre‑tax gain of $9.5bn from Anthropic‑related holdings, Project Rainer (a 500,000 Trainium2 chip cluster for Anthropic), and about 3.8GW of added power in the past year to support cloud and AI workloads. CEO Andy Jassy framed the spend as necessary to provide capacity, security and operational performance for customers looking to run core and AI workloads on AWS.

Key Points

Amazon beat most Q3 metrics; stock rallied ~13% after hours.
AWS generated $33bn in revenue, growing 20% year‑on‑year — healthy but slower than Azure and Google Cloud growth rates.
Amazon cut 14,000 jobs with ~$1.8bn in severance costs; leadership says cuts are not driven by AI right now.
Free cash flow fell sharply to $14.8bn, driven by a ~$50.9bn increase in purchases of property and equipment.
Quarterly capex was $34.2bn; 2025 capex now expected at ~$125bn and 2026 to be higher as Amazon bulks up AI/data‑centre capacity.
Amazon reported $9.5bn in pre‑tax gains tied to its Anthropic investment, helping non‑operating income.
Project Rainer and extensive Trainium2 deployment aim to funnel AI compute demand back to AWS as paying customers (including Anthropic).
Jassy emphasised AWS’s scale, security and operational performance despite recent outages reported publicly.

Context and Relevance

This update matters if you follow cloud infrastructure, AI economics, enterprise IT strategy or investor signals in tech. Amazon is simultaneously cutting roles and pouring unprecedented sums into capital projects to capture AI workloads — a clear sign the cloud providers’ capex race is intensifying. Those moves affect pricing, regional capacity, vendor lock‑in risk and where startups and enterprises decide to run large AI models.

For competitors, the message is: AWS is defending and expanding capacity. For customers, expect continued heavy investment from Amazon that may improve service but also change negotiating leverage. For investors, the headline numbers are strong but the cash flow dynamics reveal the near‑term cost of betting on AI scale.

Author’s take (Punchy)

Amazon’s still the steamroller — earnings look great on the surface, but the company is spending like a wrestler in training for a title fight. This is a high‑stakes play: job cuts and sky‑high capex now, with the bet that AI revenue (and partner spend) will pay off later. If you care about cloud capacity, vendor strategy or the economics of AI infrastructure, don’t scroll past this.

Why should I read this?

Short and blunt: Amazon’s making a huge bet on AI and cloud capacity while trimming headcount. It’s good to know because it changes where compute will live, how cloud bargaining might shift, and which providers will have the muscle to host big AI workloads. Five minutes of reading saves you time sifting through filings and conference calls.

Source

Source: https://go.theregister.com/feed/www.theregister.com/2025/10/31/amazon_earnings_q3_25/