Amazon.com (NASDAQ: AMZN) reported robust financial results for the third quarter of 2024, with significant growth across its retail, cloud, and advertising businesses. The e-commerce and technology giant posted total revenue of $158.9 billion, up 11% year-over-year, while operating income surged 56% to reach $17.4 billion.

The company's cloud division, Amazon Web Services (AWS), showed strong momentum with revenue growing 19.1% to $27.5 billion, reaching a $110 billion annualized run rate. Operating income for AWS increased 50% year-over-year to $10.4 billion, demonstrating improved operational efficiency and scale benefits.

"We're seeing significant reacceleration of AWS growth for the last four quarters," said Andy Jassy, Amazon's CEO, during the earnings call. "With the broadest functionality, the strongest security and operational performance, and the deepest partner community, AWS continues to be a customer's partner of choice."

In the core retail business, North America segment sales grew 9% to $95.5 billion, while International segment sales increased 12% to $35.9 billion. The company's advertising business continued its strong performance, generating $14.3 billion in revenue, an increase of 18.8% compared to the same period last year.

Net income for the quarter reached $15.3 billion, or $1.43 per diluted share, compared to $9.9 billion, or $0.94 per share, in the same quarter last year. Operating cash flow improved significantly, increasing 57% to $112.7 billion for the trailing twelve months.

The company also made substantial progress in operational efficiency, with improved inventory placement allowing 25% better spread across fulfillment centers year-over-year. Over 40 million customers received same-day delivery orders in the quarter, representing a 25% increase from the previous year.

Detailed analysis of key business segments

North America retail operations

Amazon's North America segment showed resilient growth despite economic uncertainties. The 9% revenue increase was driven by strong unit growth and improved operational efficiency. Operating income for the segment reached $5.7 billion, with operating margin expanding to 5.9%, up 100 basis points year-over-year.

International markets performance

The International segment demonstrated strong momentum with 12% revenue growth and significant profitability improvements. Operating income reached $1.3 billion, marking the seventh consecutive quarter of year-over-year operating margin improvement. The segment has generated $2.5 billion in operating profit year-to-date.

AWS cloud services

AWS maintained its leadership position in the cloud infrastructure market, with several key customer wins including ANZ Banking Group, Booking.com, Capital One, and Toyota. The segment's operating margin increased to 38.1%, benefiting from improved operational efficiency and a measured pace of hiring.

Advertising growth

Advertising services continued to show robust growth, with expanding opportunities across various platforms. The company's advertising revenue grew 18.8% year-over-year, demonstrating strong demand from advertisers and improved ad technology capabilities.

Strategic initiatives and future outlook

The strong quarterly results reflect Amazon's successful execution across multiple strategic initiatives. The company's focus on operational efficiency and cost management has yielded significant improvements in profitability while maintaining growth momentum.

In the retail segment, Amazon continues to invest in faster delivery capabilities and improved inventory management. The company's next-generation fulfillment center design, launched in Shreveport, Louisiana, incorporates new robotics innovations that reduce fulfillment processing time by up to 25%.

The AWS segment is positioning itself strongly in the artificial intelligence market. According to CEO Andy Jassy, "AWS's AI business is a multibillion-dollar revenue run rate business that continues to grow at a triple-digit year-over-year percentage and is growing more than three times faster at this stage of its evolution as AWS itself grew."

Looking ahead, Amazon provided guidance for the fourth quarter of 2024, expecting:

• Net sales between $181.5 billion and $188.5 billion, representing growth of 7-11%
• Operating income between $16.0 billion and $20.0 billion, compared to $13.2 billion in Q4 2023

Market impact

Amazon's Q3 results demonstrate the company's strong competitive position across multiple high-growth markets. The consistent improvement in profitability, particularly in the International segment, shows the success of Amazon's operational optimization efforts.

The acceleration in AWS growth is particularly significant given the size of the business and broader industry concerns about cloud spending. The strong performance in advertising also highlights Amazon's growing importance in the digital advertising landscape.

The company's continued investment in artificial intelligence and robotics positions it well for future growth opportunities. The rapid scaling of same-day delivery capabilities and improved fulfillment efficiency demonstrate Amazon's ability to enhance its competitive advantages in e-commerce.

Amazon's advertising empire

In the third quarter of 2024, Amazon's advertising business emerged as a powerful growth engine, generating $14.3 billion in revenue and marking an impressive 18.8% year-over-year growth. This performance underscores Amazon's increasingly dominant position in the digital advertising landscape and highlights several key developments that merit deeper analysis.

Scale and market position

Amazon's advertising business has evolved from a supplementary revenue stream to a major profit center, now operating at an annualized run rate of over $57 billion. This scale puts Amazon firmly in competition with traditional digital advertising giants like Google and Meta, particularly in retail media and commerce-driven advertising.

The company's unique position in the advertising ecosystem stems from several competitive advantages:

First-Party Data Advantage

• Access to actual purchase behavior and shopping intent data
• Real-time insights into consumer browsing and buying patterns
• Direct attribution capabilities linking ads to sales

Extensive Reach

• Over 300 million active customer accounts globally
• Multiple touchpoints including e-commerce, streaming, and gaming
• Growing presence across different ad formats and platforms

Advertising Technology Infrastructure

• Advanced machine learning capabilities for ad targeting
• Integration with AWS's artificial intelligence services
• Comprehensive measurement and analytics tools

Innovation in advertising products

During Q3 2024, Amazon introduced several significant innovations in its advertising offerings:

Generative AI integration

The company launched new AI-powered creative tools across display, video, and audio advertising formats. A notable innovation is the video generator tool that can create custom AI-generated videos from a single product image, significantly reducing the barrier to entry for video advertising, particularly for smaller sellers and brands.

Sponsored Products evolution

The core Sponsored Products program continued to show strong growth on what is already a substantial base. Amazon reported meaningful improvements in advertising relevancy and performance through enhanced optimization controls provided to advertisers.

Prime Video advertising

The quarter marked Amazon's first broadcast season for Prime Video advertising following a strong showing at upfronts. This new revenue stream represents a significant opportunity for growth, allowing advertisers to reach engaged streaming audiences in a premium content environment.

Advertiser adoption and engagement

The growth in advertising revenue reflects strong adoption across different advertiser segments:

Third-Party Sellers

• Increased adoption of advertising tools to improve visibility
• Growing sophistication in campaign management
• Higher average spend per seller

Brand Advertisers

• Expanded use of Amazon's full-funnel advertising solutions
• Integration of Amazon advertising into broader marketing strategies
• Increased investment in brand-building campaigns

External Advertisers

• Growing use of Amazon's ad network beyond Amazon properties
• Increased adoption of Amazon's demand-side platform
• Expansion into new advertiser categories

Technological infrastructure and innovation

Amazon's advertising success is built on a foundation of sophisticated technology:

AI and machine learning

• Implementation of advanced algorithms for ad targeting
• Development of predictive analytics for campaign optimization
• Integration of natural language processing for better ad relevancy

Measurement and attribution

• Enhanced cross-device tracking capabilities
• Improved attribution models for online and offline sales
• Advanced analytics for campaign performance optimization

Platform integration

• Seamless integration with Amazon's e-commerce platform
• Connection with AWS services for enhanced capabilities
• Integration across multiple consumer touchpoints

Future growth drivers

Several factors position Amazon's advertising business for continued growth:

Retail media expansion

• Growing adoption of retail media networks
• Increased shift of traditional retail advertising to digital platforms
• Expansion of advertising opportunities across Amazon's ecosystem

Video advertising growth

• Scaling of Prime Video advertising
• Expansion of streaming ad inventory
• Development of new video ad formats

International expansion

• Growth in emerging markets
• Localization of advertising solutions
• Expansion of ad products across global markets

Challenges and opportunities

While the advertising business shows strong momentum, several challenges and opportunities lie ahead:

Challenges

Privacy Regulations

• Evolving data protection requirements
• Changes in tracking and targeting capabilities
• Need for privacy-compliant solutions

Competition

• Increasing competition from other retail media networks
• Growing sophistication of competitor offerings
• Pressure on pricing and margins

Technical Complexity

• Need for continued innovation in ad technology
• Integration challenges across platforms
• Measurement complexity in a fragmented media landscape

Opportunities

AI Integration

• Enhanced targeting capabilities through AI
• Automated campaign optimization
• Improved creative generation and testing

New Ad Formats

• Expansion into emerging advertising channels
• Development of interactive ad experiences
• Integration of augmented reality advertising

Cross-Platform Integration

• Enhanced measurement across touchpoints
• Improved attribution modeling
• Better cross-platform campaign management

Industry significance

Amazon's advertising performance in Q3 2024 demonstrates the company's growing influence in the digital advertising industry. The combination of strong revenue growth, technological innovation, and expanding capabilities positions Amazon as a major force in the future of digital advertising.

The success of Amazon's advertising business also validates the company's strategy of building multiple revenue streams around its core e-commerce platform. The synergies between advertising, retail, and cloud services create a powerful ecosystem that benefits advertisers, sellers, and consumers.

Key Facts

• Revenue: $158.9 billion, up 11% year-over-year
• Operating income: $17.4 billion, up 56%
• AWS revenue: $27.5 billion, up 19.1%
• Advertising revenue: $14.3 billion, up 18.8%
• Net income: $15.3 billion, up from $9.9 billion
• Operating cash flow: $112.7 billion TTM, up 57%
• Free cash flow: $47.7 billion TTM
• North America segment operating margin: 5.9%
• AWS operating margin: 38.1%
• Q4 guidance: $181.5-188.5 billion in revenue