Amazon Web Services (AWS) just shared some impressive numbers for the last quarter of 2024. Their revenue hit $28.8 billion, up from $24 billion a year earlier. That’s a strong 19% growth year-on-year for the second quarter in a row. Profit also surged from $7.1 billion in Q4 2023 to $10.6 billion this time around.
This momentum points to a real boost in growth as AWS continues to capitalize on enterprise interest in its public cloud services. Companies spent much of 2023 reevaluating their cloud strategies due to economic challenges, but now they’re diving back in. For the entire year, AWS reported revenues of $107.6 billion, again reflecting a 19% year-on-year increase, and they turned around to a significant operating income of $39.8 billion after facing a $2.7 billion loss in 2023.
Andy Jassy, Amazon’s CEO, emphasized that the fourth quarter was one of “remarkable innovation” for AWS, highlighting new AI-enabling chips and models they recently launched. In a conference call, he spoke candidly about the ups and downs AWS might face in the coming years. Despite the uncertainties, he remains optimistic about AWS serving a major role in supporting AI workloads globally.
Jassy painted a picture of a future where nearly every application integrates generative AI, and businesses operate with their own intelligent agents. He believes that most of this innovation will happen on the cloud, primarily on AWS.
In previous quarters, the financial benefits from AI adoption have been clear, but Jassy also stressed AWS’s commitment to helping businesses upgrade their infrastructures and migrate from on-premise systems to the public cloud. He shared news of new agreements focused on cloud migrations, which has brought in several new customers.
However, keeping up with the growing demand for public cloud and AI comes with high costs. AWS reported over $26 billion in capital spending in that last quarter alone. CFO Brian Olsavsky mentioned that this pace of investment would likely continue into 2025, with AWS on track to spend about $100 billion on infrastructure in the next year.
Lee Sustar, an analyst at Forrester, noted that while AWS’s growth is promising, investors reacted less enthusiastically than expected. A 19% revenue increase would generally be celebrated, but the high expectations around AI led to some disappointment among investors. Jassy mentioned that older equipment would be phased out more quickly than planned, which might initially hit operating income in 2025, and those ongoing investments could squeeze margins. While some investors may feel nervous about this, the commitment to infrastructure will reassure AWS customers who rely on these services.