AWS misses quarterly revenue expectations – but Andy Jassy is still upbeat

Amazon Web Services (AWS) recorded slower than expected growth, according to its latest financial results, marking the third straight quarterly revenue miss for Amazon’s cloud division.

Revenue at AWS increased 16.9% to $29.27 billion in its first quarter, ending 31 March. This was slightly below analyst expectations of $29.42 billion and marked a slower growth rate (18.9%) compared to Q4 2024.

Operating income at AWS, meanwhile, reached $11.55 billion – higher than analyst expectations – and recorded an operating margin of 39.5%,the widest it has been since 2014.

Commenting on the earnings results, Amazon CEO Andy Jassy appeared upbeat, highlighting positive moves at the cloud giant and parent company.

“We’re pleased with the start to 2025, especially our pace of innovation and progress in continuing to improve customer experiences,” he said.

Jassy pointed to the expansion of its Bedrock service and the launch of its new Trainium2 chips, saying this will “make it easier for AWs customers to train models and run inference more flexibly and cost-effectively”.

The Bedrock service has been a key focus for the cloud giant since it first launched in mid-2023. The platform allows enterprise users to harness a range of large language models (LLMs), including third-party options and models developed in-house.

Since its last financial results, the company has integrated new foundation models in Bedrock, including Anthropic’s Claude 3.7 Sonnet, DeepSeek’s R1, Meta’s Llama 4 model family, and Mistral AI’s Pixtral Large.

AWS still reigns supreme

AWS accounts for 19% of Amazon’s overall revenue and still holds the top spot in the global cloud computing market. However, key competitors, particularly Microsoft, have been gaining ground in recent years.

On 30 April, Microsoft announced its cloud revenue topped $42.4 billion, marking a 20% increase year-on-year.

In its latest quarterly results, CFO Amy Hood revealed revenue in the firm’s Intelligent Cloud Segment stood at $26.8 billion, marking an increase on the previous quarter.

Notably, Azure and other cloud services revenue grew by 33% in the same period - a 2% increase compared to the previous quarter.

Google Cloud, another key AWS competitor, also recorded significant growth in its quarterly financial results this week, with revenue increasing 28% year-on-year.

Google and Alphabet CEO Sundar Pichai attributed this growth to the company’s “differentiated, full-stack approach to AI”.

“This quarter was super exciting as we rolled out Gemini 2.5, our most intelligent AI model, which is achieving breakthroughs in performance, and it’s widely recognized as the best model in the industry,” he said in a blog post.

“That’s an extraordinary foundation for our future innovation. And we are focused on bringing this to people and customers everywhere."

MORE FROM ITPRO

• AWS to give AI skills to 100,000 people in the UK by 2030
• AWS just rolled out Amazon Q Business in Europe – and it includes new data residency features
• AWS sharpens sustainability focus as AI environmental concerns rise