|Amazon Web Services reports 45 percent jump in revenue in the fourth quarter|
Jordan Novet | @jordannovet
- Amazon Web Services said revenue reached $7.43 billion in the fourth quarter.
- The segment remains Amazon's dominant source of profit.
Published 17 Hours Ago Updated 14 Hours Ago CNBC.com
Amazon's cloud-computing division said revenue jumped 45 percent in the fourth quarter, as the company continued to cement its lead over Microsoft and Google.
Sales at Amazon Web Services climbed to $7.43 billion from $5.11 billion a year ago, topping the $7.29 billion consensus estimate among analysts polled by FactSet. AWS revenue represented 10 percent of total quarterly sales at Amazon.
The cloud business has become crucial to the success of its parent, not only for revenue but also for profits.
Operating income for AWS in the quarter was $2.18 billion, exceeding the $2.09 billion FactSet consensus estimate. The unit accounted for 58 percent of Amazon's overall operating income. AWS' operating margin was 29 percent, shrinking from 31 percent the prior quarter.
"We are getting more and more creative around getting efficiency up and getting our cost of acquisition down," Amazon's chief financial officer, Brian Olsavsky, told analysts on the company's quarterly earnings call on Thursday.
AWS beat Microsoft and Google to the market for cloud infrastructure, which companies use to outsource their computing and data storage needs, and has held onto its lead.
However, Microsoft's business is growing faster, even though it's still smaller than AWS. The software company said on Wednesday that Azure cloud revenue grew 76 percent in the latest quarter.
Brian Weiser, an analyst at Pivotal Research Group, had estimated that AWS would generate fourth-quarter revenue of $7.41 billion.
"With substantial upside potential for AWS and a strong track record, we think we can safely assume significant ongoing revenue growth for the foreseeable future," wrote Weiser, who initiated Amazon coverage with a "buy" rating earlier this month.
AWS' big announcements in the period included the introduction of new computing instances that rely on ARM-based server chips, custom-built chips for accelerating artificial-intelligence work and a plan to offer hardware equipped with AWS software for corporate data centers.