Will Strong AWS Performance Improve Amazon's Q3 Results?

Amazon’s AMZN third-quarter 2025 results, scheduled to be released on Oct. 30, are likely to reflect gains from its strengthening cloud service offerings.

Amazon Web Services (“AWS”) remains the crown jewel in Amazon's portfolio, with our model estimate projecting AWS sales of $32.49 billion for third-quarter 2025, indicating robust 18.4% year-over-year growth. 

In the second quarter, AWS generated $30.8 billion in revenues, with an impressive 17.5% year-over-year increase. More significantly, AWS achieved an operating income of $10.1 billion, up 8.8% from the year-ago quarter. This performance continues to solidify AWS' position as the market leader, competing effectively against Microsoft MSFT Azure, Alphabet GOOGL-owned Google Cloud, and Oracle ORCL. During the second quarter of 2025, according to new data from IT market research firm Synergy, AWS ranked No. 1 in market share by winning 30% share of the market, followed by Microsoft’s 20% and Google’s 13%. 

The cloud computing giant likely benefited from several strategic initiatives and product launches executed during the July-through-September period that positioned AWS to capture accelerating enterprise demand for artificial intelligence capabilities.

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Agentic AI Leadership Takes Center Stage

The introduction of Amazon Bedrock AgentCore at the AWS Summit in New York during July represented a pivotal development that likely influenced third-quarter results. This enterprise-grade platform enabled organizations to deploy and operate secure AI agents at scale, addressing the growing market demand for agentic AI solutions. AWS doubled down on this opportunity by committing an additional $100 million investment through the AWS Generative AI Innovation Center specifically to boost agentic AI development, signaling management's confidence in this emerging revenue stream. The timing of these announcements positioned AWS to capitalize on enterprises rushing to implement AI agent technologies before year-end budget cycles concluded.

Expanding Model Selection Strengthens Competitive Position

Amazon Bedrock's model portfolio expanded significantly during the quarter with the September addition of Qwen3 foundation models from Alibaba and DeepSeek-V3.1 models, both featuring advanced capabilities in coding, mathematics and reasoning tasks. These open-weight models provided customers with enhanced customization opportunities while maintaining AWS's enterprise-grade security standards. The broader selection likely attracted workloads from customers seeking alternatives to proprietary models, potentially driving incremental adoption and consumption growth. Additionally, AWS introduced Amazon Nova customization capabilities within Amazon SageMaker AI, enabling customers to achieve higher accuracy and flexibility when fine-tuning foundation models for specific use cases.

Infrastructure Investments Position AWS for Sustained Growth

Management's guidance from the second-quarter earnings call indicated capital expenditures would maintain the $31.4 billion quarterly pace established in the second quarter, with investments predominantly directed toward AI-related infrastructure, including data center capacity, custom Trainium chips, and enhanced cooling systems. This aggressive investment strategy addressed the supply constraints that management acknowledged were limiting growth potential.

The combination of agentic AI momentum, expanded model offerings, and resolving infrastructure bottlenecks created favorable conditions for AWS to potentially deliver steady results in the third-quarter 2025. Amazon carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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