Amazon released its latest quarterly earnings, and the market responded with a sharp 7% drop in the company’s stock price. The primary culprit? Amazon Web Services (AWS), the tech giant’s cloud computing arm, grew revenue by just 17% year-over-year, trailing behind its competitors, Microsoft Azure and Google Cloud, which are posting stronger gains. The underwhelming performance has rattled investors, casting a shadow over an otherwise solid report.
During the post-earnings conference call, CEO Andy Jassy attempted to defend AWS’s growth trajectory, emphasizing its massive scale. With an annual revenue of $123 billion, Jassy argued that comparing percentage growth rates with smaller players like Microsoft and Google is misleading. “The numbers tell a different story when you’re starting from such a dominant position,” he said.
However, his explanation failed to sway analysts, who pressed him on the company’s artificial intelligence (AI) strategy — a key area of investor focus. Jassy’s response veered into lengthy musings about the “early stages of the AI market” and Amazon’s custom Trainium chips, but the lack of concrete progress left many unconvinced.
A revealing detail emerged amid the discussion: the primary bottleneck hindering AWS growth is electricity. Jassy admitted that securing sufficient power for data centers to meet demand will take “several quarters” to resolve. This constraint underscores the challenges Amazon faces as it ramps up infrastructure to support AI workloads and compete with rivals pouring resources into the sector.
Despite the lukewarm reception, the broader context offers perspective. AWS still commands a commanding 30% share of the cloud market, dwarfing Microsoft Azure’s 20% and Google Cloud’s 13%.
All three players are growing, and analysts estimate significant headroom remains, particularly as companies continue migrating from on-premises infrastructure to the cloud. This long-term potential suggests the current dip may be a temporary setback rather than a fundamental shift.
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Still, the market’s reaction reflects growing impatience with Amazon’s pace. While AWS remains a profit engine, its slower growth compared to competitors has raised questions about Amazon’s ability to maintain its lead in the AI-driven cloud race. For now, investors are left waiting — both for clearer AI milestones and for the electricity constraints to ease. Whether Jassy’s optimism holds will depend on how quickly Amazon can turn its infrastructure challenges into a competitive edge.
