Attendees at an Amazon.com Annual Cloud Computing Conference
Salvador Rodriguez | Reuters
Amazon said on Thursday that sales in its cloud division grew 35% in the third quarter, slower than analysts had expected and the lowest growth rate in more than five years.
Amazon Web Services, which provides data processing, storage and networking tools that companies can use to run a wide range of applications, ended the quarter with $ 9 billion in revenue, according to a statement. Analysts polled by FactSet had expected $ 9.1
Segment performance negatively impacted the entire Amazon, reporting lower revenue than analysts had predicted.
AWS revenues continue to grow faster than the parent company, which together saw a growth of 24%. But growth in cloud business was down from 37% growth in the previous quarter.
Launched in 2006, AWS is the dominant player in cloud infrastructure, ahead of Microsoft, Google, Alibaba, IBM and Oracle. Microsoft, the No. 2 player, reported 59% sales growth from the Azure cloud on Wednesday, though the company did not provide actual sales figures for the device.
For the past four years, AWS has provided the bulk of Amazon's revenue. In the third quarter, AWS's operating revenue was $ 2.26 billion, up 9% from the prior year and below the $ 2.55 billion FactSet consensus estimate. AWS's operating income increased by 8.9%, which is the slowest growth in four and a half years.
"Costs associated with building AWS marketing teams and larger infrastructure spend, relative to the previous year, will continue to work toward margin in Stifel analysts, who have an Amazon stock buy rating, wrote in a note distributed to customers this week. "We expect AWS margin, which fluctuates quarter-to-quarter, due to investment."
In the third quarter, AWS delivered 71% of Amazon's total revenue and 13% of its total
AWS purchased startup E8 in the quarter and announced the opening of a group of data centers in Bahrain for customers to use.
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