Amazon shares rise after rising third-quarter earnings

Amazon Shares rose 7% on Friday, nearing an all-time high, after the company reported better-than-expected earnings driven by growth in its cloud computing and advertising businesses.

The stock is up about 32% for the year, hitting $200.50 on Friday. The highest closing price was $200, a mark the stock reached twice in July.

Revenue rose 11% to $158.9 billion in the quarter, topping analysts surveyed by LSEG's estimate of $157.2 billion. The profit of $1.43 beat the average analyst estimate of $1.14.

According to StreetAccount, revenue at its Amazon Web Services cloud business rose 19% to $27.4 billion, falling just short of analyst estimates. That was up from 12% a year ago, but fell short of rivals' growth Microsoft And Googlewhere cloud revenue increased by 33% and 35%, respectively. Microsoft's Azure number includes other cloud services.

Amazon's capital expenditures rose 81% year-over-year to $22.62 billion as the company continued to invest in data centers and similar equipment Nvidia Processors for artificial intelligence products. Amazon has launched several AI products across its cloud and e-commerce businesses and is also expected to announce a new version of its Alexa voice assistant powered by generative AI.

“Amazon has integrated AI into the most diverse technology footprint of any mega-cap, with billion-dollar revenue streams in e-commerce, advertising, subscriptions, online video and cloud,” analysts at Roth MKM wrote in a note following the earnings report. You have a buy recommendation for the stock.

Amazon CFO Brian Olsavsky said on the call that the majority of the company's capital spending in 2024 will go toward meeting growing technology infrastructure needs.

CEO Andy Jassy said the company plans to spend about $75 billion on capital expenditures in 2024, and he expects the company to spend even more next year.

“The increases here are really driven by generative AI,” Jassy said on the call. “It's a really unusually large, perhaps once-in-a-lifetime opportunity,” he said, noting that shareholders “will feel good about us pursuing it aggressively in the long run.”

Another bright spot was advertising. The unit's revenue rose 19% to $14.3 billion in the quarter, meeting expectations and beating growth in Amazon's core retail business.

Amazon's ad growth was about the same Metawhich reported 18.7% growth, faster than Google, which reported a 15% increase in advertising revenue. SnapSales also increased by 15% compared to the previous year.

Amazon forecast revenue between $181.5 billion and $188.5 billion for the current quarter, which would represent year-over-year growth of 7% to 11%. The midpoint of that range, $185 billion, fell short of the average analyst estimate of $186.2 billion, according to LSEG.

—CNBC's Ari Levy contributed to this report

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