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

Core Insights - Amazon Web Services (AWS) revenue increased by nearly 24% in Q4, reaching $35.58 billion, surpassing analysts' expectations of $34.93 billion, and accounted for approximately 17% of Amazon's total revenue for the quarter [1][2] Group 1: Financial Performance - AWS operating income was $12.47 billion, exceeding the consensus estimate of $11.91 billion, and represented a significant portion of Amazon's overall profits [2] - The operating margin for AWS slightly widened to 35% from 34.6% in the previous quarter [2] Group 2: Competitive Landscape - Amazon continues to lead the cloud infrastructure market, which it pioneered nearly 20 years ago, but faces increasing competition from Google and Microsoft, both of which are experiencing rapid growth in their cloud services, particularly in artificial intelligence [2][3] - Google Cloud revenue surged by about 48%, marking its fastest growth since 2021, while Microsoft reported a 39% increase in revenue from Azure and other cloud services [3] Group 3: Product Developments and Investments - In Q4, AWS launched Nova Forge, which allows access to Amazon's generative AI models for advanced customization during the training phase, and announced a $38 billion spending commitment from OpenAI [4] - AWS added nearly 4 gigawatts of computing capacity in 2025, while Microsoft added almost 1 gigawatt during the same period [5] - Amazon anticipates $200 billion in capital expenditures for 2026, significantly higher than the consensus estimate of $148.86 billion [5]