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Amazon cloud revenue jumps 49 percent in first quarter

  • AWS revenue jumps 49 percent in the quarter.
  • The business generated $1.4 billion in operating income for Amazon.

Amazon's cloud business exceeded analyst estimates, with revenue climbing 49 percent in the first quarter.

Amazon Web Services reported sales on Thursday of $5.44 billion, compared to the $5.26 billion average estimate of analysts surveyed by FactSet. AWS contributed about 11 percent of Amazon's total revenue for the period, up from 8.5 percent in the prior quarter.

AWS continues to be a big revenue driver and even larger profit engine for its parent company, which dominates the low-margin e-commerce market. In cloud-computing infrastructure, Amazon has a substantial market share lead over Microsoft Azure, Google's Cloud platform and IBM, as well as other players like Alibaba and Oracle.

While AWS has maintained growth above 40 percent, Microsoft and Google are currently expanding much faster and picking up share. In the first quarter Microsoft's Azure cloud grew 93 percent.

AWS produced $1.4 billion in operating income in the first quarter. That accounted for 73 percent of Amazon's $1.93 billion in operating income.

Jordan Novet | CNBC

The higher-margin AWS business "will continue to positively impact total company margins," wrote Mark Mahaney, an analyst at RBC Capital Markets, in a report ahead of the earnings announcement.

During the quarter, AWS acquired security start-up Sqrrl, which spun out of the National Security Agency. It was also forced to contend with a technical snafu in its Virginia region of data centers, which affected customers like Twilio and Atlassian.

AWS said in March that its services comply with the General Data Protection Regulation rules, the privacy legislation in Europe that goes into effect on May 25.

WATCH: Amazon hits all-time high, beats estimates