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Amazon Stock Soars on Strong Q3 Earnings and AWS Growth: What You Need to Know

Amazon (AMZN) has once again captured Wall Street’s attention with a stellar Q3 earnings report, sending its stock price surging. The e-commerce and tech giant delivered revenue and profit beats, driven primarily by explosive growth in its cloud computing division, Amazon Web Services (AWS). For investors, this performance signals Amazon’s resilience and its continued dominance in the cloud and AI race.

But what’s really behind the rally? And what does this mean for your portfolio?

Let’s break down the key facts, recent developments, and what’s ahead for one of the most influential stocks in the market.

The Big News: Earnings Beat and AWS Growth Ignite Rally

On October 30, 2025, Amazon released its third-quarter financial results, and the market responded swiftly—AMZN stock jumped over 6% in after-hours trading.

According to Yahoo Finance, Amazon beat both top-line (revenue) and bottom-line (earnings per share) estimates. The company reported adjusted earnings per share (EPS) of $1.43, surpassing analyst expectations of $1.15. Revenue climbed to $158.9 billion, a 12% year-over-year increase, also ahead of the consensus estimate of $157.2 billion.

The real star of the show? Amazon Web Services (AWS).

As CNBC reported, AWS posted 20% year-over-year revenue growth, reaching $27.5 billion in the quarter—well above the expected $26.8 billion. This marks a significant acceleration from previous quarters and signals that the cloud division is regaining momentum after a period of slowing growth.

“AWS is back in high-growth mode,” said one analyst on MarketWatch. “This is a clear sign that enterprise cloud spending is rebounding, and Amazon is capturing a disproportionate share of that demand.”

The strong AWS performance wasn’t just about volume—it also reflected improving margins. AWS operating income rose 25% year-over-year, indicating that Amazon is not only growing but also becoming more efficient.

Recent Updates: A Timeline of Key Developments

Here’s a quick rundown of what’s happened in the lead-up to and aftermath of the Q3 earnings release:

• October 2025 (Pre-Earnings): Analysts at major firms like JPMorgan and Morgan Stanley raised their price targets for AMZN, citing improving AWS growth trends and AI-driven demand. The 12-month consensus price target reached $267.09, a 16.5% premium to pre-earnings levels, according to unverified data from financial aggregators.

• October 30, 2025 (Earnings Release): Amazon reports Q3 revenue of $158.9B and EPS of $1.43, both beating expectations. AWS revenue hits $27.5B, up 20% YoY.

• October 30–31, 2025 (Market Reaction): AMZN stock surges over 6% in after-hours trading, with trading volume spiking to over 20 million shares in extended sessions—double the average.

• October 31, 2025 (Analyst Commentary): Multiple investment banks, including Bank of America and Goldman Sachs, reiterate “Buy” ratings, highlighting AWS’s AI infrastructure investments and enterprise adoption as key catalysts.

• Ongoing (AI Expansion): Amazon continues to roll out Bedrock, its generative AI platform for enterprises, and Q, its AI-powered assistant for developers. These tools are helping AWS compete more effectively with Microsoft Azure and Google Cloud.

These developments underscore a turning point for Amazon’s cloud business—one that investors have been watching closely.

Why AWS Matters: The Engine Behind Amazon’s Growth

To understand why this earnings report was such a big deal, you need to know what AWS actually does—and why it’s so profitable.

Amazon Web Services is the world’s largest cloud computing platform, providing infrastructure (like servers and storage), machine learning tools, databases, and AI services to businesses, governments, and startups. From Netflix to the CIA, AWS powers some of the most critical digital operations globally.

But for years, AWS growth had been slowing—from 30%+ in 2022 to around 12% in early 2024—as enterprises cut back on cloud spending and competitors like Microsoft Azure gained ground.

Now, the 20% growth in Q3 2025 suggests that the tide has turned.

“In the rapidly evolving world of generative AI,” Amazon CEO Andy Jassy said in a recent earnings call (as reported by multiple sources), “AWS continues to build a large, fast-growing, triple-digit year-over-year percentage multibillion-dollar business with more demand than we have supplied for at the moment.”

This quote is crucial. It means AWS is supply-constrained, not demand-constrained. In other words, Amazon can’t build data centers fast enough to meet the surge in AI and cloud demand.

This is a bullish signal for investors. When a company says it has more demand than it can handle, it’s a sign of pricing power, growth potential, and market leadership.

And AWS isn’t just growing—it’s profitable. With an operating margin of around 30%, AWS generates the vast majority of Amazon’s profits, even though it accounts for only about 15% of total revenue. This makes it the cash cow that funds Amazon’s other ventures, from grocery stores to space exploration.

The Bigger Picture: Amazon’s Multi-Pronged Strategy

While AWS stole the spotlight, Amazon’s other businesses also contributed to the strong quarter:

• North American Retail Sales rose 11% YoY, driven by Prime Day 2025 and improved delivery efficiency.
• International Sales grew 10%, with strong performance in India and Europe.
• Advertising Revenue jumped 22%, reaching $14.3 billion, as more brands use Amazon’s platform for targeted ads.
• Physical Stores, including Whole Foods, saw modest growth, but remain a small part of the business.

But the real story is integration. Amazon is increasingly connecting its ecosystem—using AWS to power its retail operations, AI to improve ad targeting, and logistics data to optimize delivery times. This synergy is what sets Amazon apart from pure-play tech or retail companies.

For example, when you search for a product on Amazon, AI models trained on AWS recommend items, ads are served in real time, and fulfillment centers use cloud-powered logistics to ship your order within hours. That’s not just e-commerce—it’s digital infrastructure at scale.

Immediate Effects: What This Means Right Now

The Q3 results had immediate and tangible impacts:

1. Stock Price Surge

AMZN stock rose from around $225 to over $240 in just 24 hours post-earnings. This added over $100 billion to Amazon’s market cap.

2. Analyst Upgrades

At least 12 major firms upgraded their price targets, with some calling for $280 or higher in the next 12 months. The consensus “Buy” rating from 58 analysts (as noted in pre-earnings research) reflects strong institutional confidence.

3. Market Sentiment Shift

After a year of concerns about slowing cloud growth and rising AI competition, investors now see Amazon as a leader in the next wave of AI adoption. AWS is no longer just a cloud provider—it’s becoming an AI platform.

4. Regulatory and Competitive Landscape

The strong earnings come amid ongoing antitrust scrutiny in the U.S. and EU. However, the performance may help Amazon argue that its dominance is driven by innovation, not anti-competitive behavior. Meanwhile, AWS is gaining ground on Microsoft Azure, which reported 19% growth in its most recent quarter.

Future Outlook: What’s Next for AMZN Stock?

So, is Amazon stock a buy right now?

Based on current trends, the short-term outlook is positive, but there are risks and opportunities to consider.

Bull Case: The AI and Cloud Supercycle

• AI demand is accelerating. Every major tech company