Amazon cloud unit beats on revenue and profit as parent company ramps up AI spending

Amazon announced impressive results from its cloud services division, revealing a nearly 24% increase in revenue for the fourth quarter. The company's cloud platform, Amazon Web Services (AWS), generated $35.58 billion, surpassing analysts' expectations of $34.93 billion. This revenue accounted for approximately 17% of Amazon's overall quarterly earnings. Operating income for AWS reached $12.47 billion, exceeding the consensus estimate of $11.91 billion and constituting a significant portion of Amazon's total profits. The operating margin for AWS slightly improved to 35%, up from 34.6% in the previous quarter. As Amazon continues to lead the cloud infrastructure market, competition is intensifying from Google and Microsoft, both of whom are experiencing rapid growth, particularly in artificial intelligence services. Just recently, Alphabet reported a remarkable 48% revenue increase in its Google Cloud division—the fastest growth rate since 2021—while Microsoft announced a 39% rise in revenue from its Azure and other cloud services last week. In the fourth quarter, AWS launched Nova Forge, a tool that allows users access to Amazon's generative AI models during the training phase, enhancing customization capabilities. Additionally, the company revealed a substantial $38 billion investment commitment from OpenAI. Major cloud providers are racing to enhance their AI infrastructure, catering to companies like Anthropic and OpenAI. AWS CEO Matt Garman mentioned that AWS added nearly 4 gigawatts of computing capacity in 2025, while Microsoft CEO Satya Nadella stated that they brought about a gigawatt online through the fourth quarter. Looking ahead, Amazon anticipates capital expenditures of $200 billion by 2026, significantly higher than the Visible Alpha consensus of $148.86 billion.