Tech Drivers
Tech Drivers

AWS revenue grows 42% to $4.10 billion

Key Points
  • AWS gave Amazon $916 million in operating income in the quarter.
  • Revenue growth for the business segment has now declined for eight consecutive quarters.
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Amazon on Thursday reported its Amazon Web Services public cloud generated $916 million in operating income on $4.10 billion in revenue in the second quarter of this year.

Revenue for the AWS business increased by 42 percent year over year, higher than analysts' expectations according to FactSet.

Analysts had expected $1.01 billion in operating income from AWS, based on revenue of $4.08 billion, implying 41 percent in revenue growth year over year.

Amazon stock is down slightly after hours on an earnings miss.

Generally speaking, analysts are optimistic about AWS. The Amazon cloud is seen as a reliable source of revenue growth as companies continue to spend more on public cloud computing resources.

But AWS revenue growth (on a year-over-year basis) has declined for eight consecutive quarters now. What's more, in the first quarter AWS reported sequential revenue growth of just 4 percent, falling "well below the prior two-year average of 12 percent," as a group of analysts from KeyBanc Capital Markets pointed out earlier this week.

"Even with accelerating sequential growth trends, we still see the potential for decelerating annual growth rates as the AWS business reaches a scale and size that makes it more difficult to sustain hypergrowth rates," the analysts wrote.

Then there's the Microsoft factor. In the second quarter, Microsoft's Azure public cloud saw revenue rise by 97 percent. Azure, which is considered the second-most popular cloud, behind AWS, has been consistent on matching AWS's prices and regularly introduces new services and makes its tools available from data centers in more places around the world.

In addition to Azure, there are other cloud providers for AWS to contend with, including Alphabet and Alibaba.