Amazon's AI Comeback: AWS Surges on Strong Earnings and OpenAI Deal

Amazon, once seen as trailing in Artificial Intelligence (AI), has made a significant comeback. Following a period of slower stock growth compared to peers, the company's third-quarter earnings report on October 30, 2025, showed robust performance. Amazon Web Services (AWS) revenue increased by 20.2% to $33 billion, surpassing forecasts and driven by high demand in AI and machine learning. This resurgence was further bolstered by a new $38 billion cloud services agreement with OpenAI. Amazon is significantly increasing its capital expenditure, allocating substantial funds to build data centers for AI workloads, with plans to spend around $125 billion for the full year. The company is also developing its own AI chips, Trainium, for cost-efficiency, though it still lags behind Nvidia. Despite these positive developments, Amazon is undertaking restructuring, including job cuts, and faces ongoing regulatory scrutiny. Impact: This news is highly positive for Amazon's stock, signalling a strong recovery in its AWS division and a reinforced position in the AI market. The substantial investment in AI infrastructure suggests future growth potential, reassuring investors who were concerned about market share loss to competitors. The OpenAI deal is a major win. Rating: 8/10. Difficult Terms: Artificial Intelligence (AI): Technology that enables machines to perform tasks that typically require human intelligence, like learning, problem-solving, and decision-making. Amazon Web Services (AWS): Amazon's cloud computing platform, offering services like computing power, storage, and databases to businesses and individuals. GPUs (Graphics Processing Units): Specialized computer chips originally designed for graphics rendering but now crucial for the intensive calculations needed in AI and machine learning. Capital Expenditure (capex): Money spent by a company to acquire, maintain, or improve its fixed assets, such as buildings, machinery, or data centers. AI workloads: The computational tasks and processes involved in developing and running AI applications. Trainium chips: Amazon's custom-designed chips for machine learning, aimed at providing better performance and cost-effectiveness than third-party GPUs. Synergy Research: A market research firm that tracks and reports on cloud computing and technology market trends. Wall Street: A term referring to the U.S. financial industry, particularly stock trading and investment banking. Argent Capital: An investment management firm. Reuters: A global news agency known for its business and financial news. BMO Capital Markets: A Canadian investment bank and financial services company. Federal Trade Commission (FTC): A U.S. government agency responsible for protecting consumers and promoting competition in the marketplace. Antitrust lawsuit: A legal action taken against companies that are believed to be unfairly restricting competition or engaging in monopolistic practices.