Earnings

Amazon Q3 2025 — Core Brief Edition

Core-Brief

31 Oct 2025 — 4 min read

1) Core takeaways

Amazon just printed a big AI/cloud quarter: Revenue $180.2bn (+12% YoY), operating income $17.4bn, and they basically said “it was actually $21.7bn” if you strip out the $2.5bn FTC settlement + $1.8bn severance.
AWS re-accelerated to 20.2% YoY — that’s the fastest growth in 11 quarters — but it’s doing it off a $132bn run-rate. That’s the real flex.
Management’s line: “As fast as we add AI capacity, we monetize it.” That’s the AI demand signal right now.
They are front-loading CapEx for AI: ~$125bn in 2025 and even higher in 2026. This is an AI infra buildout, not a one-off.
Ads is quietly a second growth engine: $17.6bn, +22% YoY.

2) Why this quarter matters

2024–early 2025 was about digestion/optimization in cloud. This quarter flipped the narrative back to “AI is filling the pipes.”
AWS backlog is now $200bn and doesn’t even include several October deals that together are “more than all of Q3 deal volume.” That’s classic Amazon foreshadowing: AI deals are getting bigger, longer, infra-heavy.
Everyone’s asking: “Will AI be consumed fast enough to justify this CapEx?” Amazon’s answer was basically: yes, because we own the workloads + the agents + the chips + the infra.

3) AWS — the real story

Revenue: $33bn, +20.2% YoY.
Run-rate: $132bn.
Backlog: $200bn (and rising).
What drove it?
1. Core cloud is back — enterprises are re-starting migrations, and Amazon says they are still winning “the preponderance” of big moves from on-prem.
2. GenAI usage is real — Bedrock inference, Sagemaker, agentic workloads.
3. Capacity finally coming online — they added 3.8 GW of power in 12 months; will double AWS power again by 2027; +≥1 GW just in Q4.
Chips: Tranium 2 is fully subscribed and now a multi-billion-dollar business that grew +150% QoQ. Tranium 3 previews end-2025 → volume 2026. This is how they push customers to better price/perf than Nvidia without abandoning Nvidia.
Project “Reiner” (their massive AI cluster): already online, ~500,000 Tranium 2 chips across multiple US DCs; Anthropic is training new Claude versions on it and will be at 1 million Tranium 2s by year-end. That’s a showcase: “we can give you frontier-model scale inside AWS.”
Agentic bet: Amazon is telling enterprises: “AI value = agents.” So they shipped:
- Strands → to build agents on any FM
- Agent Core → to run agents securely, at scale, with memory/observability
- Then their own agents (coding = Codewhisperer/Curo, migration = Transform, business = Q/Quickle)
- This is very AWS-ish: sell the primitives, plus a few hero agents to prove it works.

Key AWS read-through: this is not “just” AI GPU resale. It’s chip (Tranium) + DC/power + agent infra + FM marketplace (Bedrock). That stack is why they think they can keep 20%-ish growth “for a while.”

4) Retail / Commerce

North America: $106.3bn, +11% YoY
International: $40.9bn, +10% YoY ex-FX
3P share: 62% (up 200 bps YoY) — marketplace is still the profitability lever.
Same-day grocery play is working: fresh + perishables in 1,000+ US cities, heading to 2,300 → customers who start buying fresh come back 2x as often. That’s how you raise visit frequency without opening thousands of new physical stores.
Rural bet: $4bn to expand rural delivery; Amazon is delivering faster to small towns while others pull back → this expands the TAM of “places we can justify Prime-speed delivery.”

5) Advertising

Revenue: $17.6bn, +22% YoY.
Grows for third straight quarter on an already big base.
Full-funnel is getting real:
- Top: Prime Video, live sports (NFL, NBA on Prime, Masters 2026, PGA Black Friday)
- Mid: Amazon DSP → now with Netflix, Roku, Spotify, SiriusXM inventory
- Bottom: Sponsored products on a marketplace that’s still growing paid units +11%
They’re now monetizing an ad-supported audience of 300m+ in the US alone.
AI here too: agentic creative in Creative Studio → produce ads in hours, not weeks.

Ad read-through: this is becoming Amazon’s third growth pillar after Retail and AWS. And it’s way more diversified than “search on Amazon.”

6) Costs, CapEx, margins

Reported operating income $17.4bn → underlying $21.7bn (if no FTC + severance).
Cash CapEx 2025E: ~$125bn. CFO straight up said: 2026 will be higher.
- Where is it going? AI DCs, power, custom silicon (Tranium), core AWS infra, plus some network/fulfillment automation.
- This is Amazon’s version of “we see the demand, so we’re building ahead.”
AWS margins will fluctuate as DCs go into service (depreciation hits first, AI revenue ramps after). That’s normal for infra cycles.

7) Alexa / Rufus / Agentic commerce

Rufus (AI shopping assistant): 250m active customers this year; users who touch it are 60% more likely to buy; on track for $10bn+ incremental annualized sales. That’s a big number for an AI UX layer.
Amazon Lens (visual search) – tens of millions monthly.
They see agentic commerce as the way to make “I don’t know what I want” shopping better online than in store. That’s the unlock.
They’ll also work with 3rd-party agents, but only if:
1. pricing is right,
2. delivery estimates are correct,
3. personalization/shopping history is preserved.
  Today, they think 3rd-party agents are still too “dumb” on those parts.

8) Org / headcount note

Recent job cuts / layer removals → they framed it as culture, not P&L.
Message: “We want to run like the world’s biggest startup” → fewer layers, faster 2-way-door decisions → because AI cycle rewards speed.
But: AI will also add headcount in infra, chips, DCs — so it’s not a straight line down.

9) Tone / 2026 read

Management was upbeat and not defensive — rare combo for a CapEx-heavy call.
They basically said:
- AI demand is not the constraint.
- Power is the near-term constraint, we’re solving it.
- Chips could become the constraint later, so they’re dual-tracking: Nvidia and Tranium.
This is very different from “we hope AI pays off” — this was “we’re already monetizing it the moment we plug it in.”

10) Core-Brief wrap

What to tweet: “AWS is back above 20% growth — on $132B run rate — and Amazon is about to spend $125B to feed AI demand. As fast as they add power, they sell it.”
What to watch:
1. Tranium 3 adoption vs Nvidia
2. Agent Core customer logos
3. Bedrock token growth
4. Prime Video / sports ad RPMs
5. Rural/same-day grocery attach