Amazon Q3 2024 Earnings Call - Quick Takeaway

Overall Tone: Very Bullish on AWS (9/10 confidence)

What Management is Excited About:

• AWS revenue acceleration: $27.5B in Q3 (19% YoY growth) - now a $110B annualized run rate
• Record AWS margins: Operating margin hit 38.1% (vs 30.3% last year) - highest since 2014
• AWS operating income surge: $10.4B, up 50% YoY - driving most of Amazon’s profit growth
• AI demand “significantly exceeds capacity”: CEO Andy Jassy said they have “more demand than capacity” for AI infrastructure

What Management is Cautious About:

• Capacity constraints: Can’t fulfill all AI demand due to chip shortages (working with NVIDIA and custom Trainium chips)
• Massive capex increasing: $75B expected in 2024, with CEO Jassy saying “I suspect we’ll spend more in 2025” - mostly for AWS AI infrastructure

Key Quote:

“We have more demand than we currently have capacity for, particularly in chips.” - Andy Jassy, CEO

Investment Implication:

Management is EXTREMELY confident on AWS growth trajectory. The 19% revenue growth is accelerating (not decelerating), margins are at record highs, and they’re investing aggressively because they see multi-year AI tailwinds. Main risk: Heavy capex ($75B+ annually) requires continued demand to justify returns.

Bull case: AWS is firing on all cylinders - revenue growth + margin expansion + insatiable AI demand. The 50% operating income growth shows leverage in the model.

Bear case: Spending $75B+ with plans to increase in 2025 is a massive bet. If AI demand plateaus or competition intensifies, these investments may not deliver expected returns.

Bottom line: Yes, they are very bullish on AWS growth. This is the most confident Amazon has sounded about AWS in years.

Read Time: 2 minutes (vs 60+ minutes for full transcript)