.jpeg)
The e-commerce giant was on track to add almost $90 billion
to its market capitalization based on its last traded share price of $128.
Smaller cloud rival Microsoft rose 1.5%,
while Alphabet was down about 1.3%.
Amazon CEO Andy Jassy said on Thursday the cloud business
was stabilizing as large expansions with existing customers and first-time
agreements were likely to aid growth in the final three months of the year.
He also touted the AI opportunity for Amazon Web Services
(AWS), saying that he expected the technology to lead to "tens of billions
of dollars in revenue over the next several years".
Wall Street cheered the positive commentary for the business
that brings in almost all of Amazon's profit, but had slowed after the pandemic
as customers cut costs.
"Tech investors can breathe a sigh of relief, Bernstein
analysts said in a client note, adding that "AWS growth sounds ready to
re-accelerate even without AI."
About 26 brokerages raised their price targets on the stock,
pushing their median view to $173, according to LSEG data.
Amazon shares have rallied about 40% this year, but they
have lost nearly 8% in the past two days after Alphabet (GOOGL.O) warned that
cloud customers were curbing spending.
In the July-September period, Amazon posted its first
quarter-on-quarter increase in cloud growth in nearly two years.
A boom in AI adoption has reaccelerated growth at Microsoft
and AWS
"Amazon Web Services optimization has stabilized,
although growth fell slightly shy of our expectations," Morningstar
analyst Dan Romanoff said.
The 12.3% growth in AWS was slower than the 29% rise seen at
Microsoft's (MSFT.O) Azure cloud business, which had topped market estimates.
Google Cloud grew 22.5% in the period.
Amazon trades at 38.49 times its 12-month forward earnings
estimates, compared with Microsoft's 27.85 and Alphabet's 18.66.
To be sure, Amazon's cloud business is larger than that of
Microsoft and Google. But the e-commerce firm is seen as a laggard in the AI
race that Microsoft is leading with its bet on OpenAI and focus on big clients
that already use its services.
Amazon has tried to catch up by signing a deal in September
to invest up to $4 billion in chatbot-maker Anthropic and rolling out its
Bedrock AI service that has drawn thousands of customers.
"Generative AI is a massive catalyst that could
re-ignite growth within the (AWS) franchise," said Global X analyst Tejas
Dessai. "We see some major partnerships secured in this quarter, as key
towards driving that growth in the coming quarters."