The Wall Street Journal reports the huge importance of Amazon’s ability to rent computing power.
Amazon posted its lowest quarterly profit in a year as it invested heavily to meet consumer demand for more orders delivered faster.
The online retail giant said Thursday that opening new warehouses and shipping items with shorter delivery times caused its costs to soar in the third quarter. The company predicts heavy investments will continue through the rest of the year. Amazon opened 23 warehouses worldwide to fill orders since July, after opening just three in the first half of the year.
AWS, which has become a major factor in Amazon’s profitability, increased sales by 55% to $3.23 billion. Chief Executive Jeff Bezos has said he expects AWS, which rents computing power to a variety of startups, government agencies and other corporations, to reach $10 billion in sales this year, even amid competition from Microsoft Corp. and Alphabet Inc.
Amazon issued revenue guidance of $42 billion to $45.5 billion for the fourth quarter, when holiday sales—and its ability to deliver those orders on time—are critical to its success.