Tech major Amazon’s (AMZN) cloud services unit, Amazon Web Services, or AWS, suffered an outage, which affected a range of websites and apps from companies including Snapchat, WhatsApp and Slack in social media; Fortnite and Roblox (RBLX) in games; and Venmo, owned by PayPal (PYPL), in the fintech space. Early yesterday morning, AWS reported high error rates and latency in the Virginia region, leading to more than 11 million user reports of issues across various applications and platforms.
However, the cloud leader resolved major issues within three hours of the outage, and normal services mostly resumed by early afternoon. It also had a limited impact on the company’s shares. In fact, AMZN stock rose 1.6% during yesterday’s trading session.
Still, the outage has encouraged Amazon’s opponents to make a stronger case for not owning AMZN shares, which are down 0.5% on a year-over-year basis (YTD). Additionally, skeptics have pointed to AWS’ diminishing market share in the cloud sector, while accusing it of being the “second Apple” in terms of its lack of AI initiatives. Yet investors who ignore the $2.3 trillion market cap company do so at their peril. For what? Let’s analyze.
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Amazon isn’t just an e-commerce giant: In addition to being the global leader in cloud services, the Seattle-based company is also dabbling in streaming, logistics, and consumer electronics. This business buffer has helped the company report revenue and profit CAGR of 15.80% and 39.90%, respectively, over the past five years.
Additionally, Amazon’s profits have exceeded Street expectations for more than two years in a row. Also in the most recent quarter, the company recorded an increase in revenue and profit.
In the second quarter of 2025, the company reported net revenue of $167.7 billion, an increase of 13% from the previous year. This is remarkable growth for a company that operates at such a scale. AWS sales jumped 17.5% during the same period to $30.9 billion. Additionally, the domestic and international segments experienced year-over-year growth rates of 11% and 16%, reaching $100.1 billion and $36.8 billion, respectively.
Earnings rose 33.3% from a year earlier to $1.68 in the second quarter of 2025, easily beating the consensus estimate of $1.33, with the company forecasting net sales of between $174.0 billion and $179.5 billion for the third quarter. The midpoint of this range would indicate annual growth of 11.2%.
Cash flow also remained healthy, with Amazon’s net cash from operating activities totaling $32.5 billion in the quarter, compared to $25.3 billion in the year-ago period. Overall, the company closed the June 25 quarter with a cash balance of $57.7 billion, with no short-term debt on its books.
Finally, analysts are also positive about Amazon’s growth prospects, forecasting forecast revenue and earnings growth rates of 10.74% and 37.80%, well above the industry medians of 3.03% and 6.46%, respectively. Amazon will report its third quarter results on October 30.
As highlighted above, Amazon has many things going for it. Certainly, this requires heavy expenses and reduces margins in the short term, but in the long term, the profits can be quite juicy for Amazon shareholders. Notably, the company is currently immersed in an intensive spending campaign, increasing investments in automated logistics setups, expanded data center facilities and bespoke AI systems.
Additionally, amid buzz suggesting AWS is slipping in the rankings, the unit still represents a solid 30% share of the global cloud pie. This advantage stems from its blend of seasoned technologies, massive operational reach, a multi-tiered partner ecosystem, and a trusted balance sheet. Additionally, its broad portfolio of more than 200 refined services touches everything from computing power (EC2) and data storage (S3) to database management (RDS, DynamoDB), AI tools (SageMaker), and serverless options (Lambda). Azure and Google Cloud, for all their strengths, offer smaller internal catalogs and look to external providers more often, especially when assembling data feeds or AI.
Beyond that, AWS’ core network infrastructure and international expansion provide premier growth potential and rapid performance. Supported by more than 30 regions and more than 100 availability zones around the world, it keeps workloads close to where users actually are, reducing delays, reducing the risk of outages, and mitigating compliance barriers with on-premises data management.
So, despite all the obstacles in recent times, AWS remains the linchpin of the global cloud setup.
On the AI ​​side, Amazon is deploying local silicon, such as Trainium 2 chips, which are now reaching high-volume production. These processors are already being used for big advances, like powering the training behind Anthropic’s new Claude 4 release and powering parts of the Bedrock suite. Compared to standard GPU platforms, Trainium stands out with 30-40% higher price performance.
Bedrock itself, Amazon’s turnkey platform for building generative AI builds, is seeing rapid adoption. When it comes to base models, the team’s own Nova is making real progress, now sitting second on Bedrock’s list.
Additionally, the ad operation is also firing on all cylinders, bringing in $15.7 billion during the second quarter, with that energy expected to carry over into the year-end frenzy as brands pour more money into Amazon’s mall and video streams. Consider Prime’s more than 300 million loyal followers, whose constant engagement keeps the wheels turning in a feedback loop: Busier users mean richer ad delivery, which then improves results on the e-commerce front.
So Amazon’s overall story holds up thanks to the raw weight of its online marketplace, the clever redeployment of customer information into parallel activities like targeted promotions or wellness nudges, and the self-sustaining spin of its sprawling business tangle.
Overall, analysts remain quite bullish on AMZN stock, giving it a “strong buy” rating, with an average price target of $267.30, which denotes ~23% upside potential from current levels. Out of 57 analysts covering the stock, 50 have a “Strong Buy” rating, six have a “Moderate Buy” rating, and one has a “Hold” rating.
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As of the date of publication, Pathikrit Bose did not hold (either directly or indirectly) any positions in any of the securities mentioned in this article. All information and data contained in this article are for informational purposes only. This article was originally published on Barchart.com
