Amazon Web Services revenue grew 41% in the first quarter

Key Points
  • AWS said revenue climbed to $7.7 billion in the first quarter.
  • The cloud division continues to be Amazon's dominant source of profit.
Amazon shares popped on earnings and revenue—Here's what six experts are watching now

Amazon Web Services reported revenue growth of 41% on Thursday, as the cloud-computing division continues to provide substantial profit for its parent company.

Sales at AWS rose to $7.7 billion from $5.44 billion a year earlier, beating the $7.69 billion average analyst estimate, according to FactSet. AWS revenue represented 13% of total sales at Amazon, up from 10% in the fourth quarter.

AWS remains the dominant provider of cloud servers and storage to businesses looking to offload their data center infrastructure, but Microsoft Azure is rapidly becoming a stronger competitor and is winning notable deals, particularly in retail. Microsoft said on Wednesday that Azure revenue surged 73% in the latest quarter, helping the company top analyst estimates for profit and sales.

Gene Munster grades Amazon's quarter

Microsoft and AWS are in the last stages of competing for a $10 billion Department of Defense contract, known as JEDI, after IBM and Oracle were recently ruled out.

Operating income for AWS in the quarter was $2.2 billion. The unit accounted for about 50% of Amazon's overall operating income. AWS' operating margin was 29%, similar to the prior quarter.

Amazon doesn't provide contributions from specific customers, but some of those numbers have been made public of late, thanks to IPO filings from big spenders and documents that have been obtained by the press.

Ride-hailing company Lyft said in its prospectus that it's committed to spending at least $300 million on AWS over three years — from the beginning of 2019 through 2021. Pinterest said last month that it will spend at least $750 million on AWS over the course of a six-year period that ends in July 2023. CNBC reported this week that Apple is shelling out more than $30 million a month, or over $360 million a year, with Amazon to reliably deliver iCloud and other services to consumers.

WATCH: Amazon's cloud rakes in cash as more tech companies go public

Amazon's cloud rakes in cash as more tech companies go public