Competitors, however, are catching up fast with twice the revenue growth rate as AWS tries to defend its position as the largest public cloud provider. Credit: ThomasAFink / Shutterstock AWS posted a stable 12% revenue growth in the third quarter of 2023 buoyed by demand for generative AI-led services, despite customers trying to optimize their cloud spending. For the last few sequential quarters, revenue growth for AWS has been on a constant decline. The 12% growth in the September quarter is a sign of stability for AWS since it also posted 12% growth in the previous sequential quarter. The growth in the quarters before showed a constant decline, sliding from a robust 33% growth in the second quarter of 2022 to a mere 16% growth in the first quarter of 2023. AWS posted revenue of $23.06 billion in the September quarter despite the company still experiencing elevated cost optimization efforts from customers when compared to the same period last year. However, Amazon CEO Andy Jassy said that these cost optimization efforts have continued to “attenuate as more companies transition to deploying net new workloads.” The new workloads, according to Jassy, are mostly related to AI and generative AI. “And then you look at the very substantial gigantic new generative AI opportunity which I believe will be tens of billions of dollars of revenue for AWS over the next several years,” Jassy said during an analyst call, according to a Seeking Alpha transcript. “On a quarter-over-quarter basis, we added more than $900 million of revenue in AWS as customers are continuing to shift their focus towards driving innovation and bringing new workloads to the cloud,” Brian Olsavsky, chief financial officer at AWS, said during the same call. While announcing its earnings for the previous quarter in August, the company predicted that the revenue growth rate would stabilize post the second quarter. Operating income back on growth trajectory For the September quarter, AWS’ operating income rose by 29% year-on-year. For the previous sequential quarter, operating income declined by 6% year-on-year. The increase in operating income for the September quarter was primarily driven by the company’s headcount reductions in the second quarter and continued slowness in hiring and rehiring open positions, Olsavsky said. “There’s been also a lot of cost control in non-people categories, things like infrastructure costs and also discretionary costs. Natural gas prices and other energy costs have come down a bit in the third quarter as well,” Olsavsky added. AWS remains confident of its customer pipeline as it signed new deals in September, which will be reflected in the fourth-quarter earnings, Olsavsky said. Amazon Bedrock and Amazon CodeWhisperer are two of the company’s most important generative AI-based offerings, top executives said during the call. Competitors are catching up fast with twice the revenue growth rate as AWS tries to defend its position as the largest public cloud provider. While Google Cloud revenue managed to grow at 22% in the September quarter, Microsoft reported 29% revenue growth in Azure and other cloud services. Related content feature TransUnion transforms its business with IT On the heels of its Neustar acquisition, the consumer credit reporting agency seeks to give customers access to its troves of consumer data to fuel next-generation services through solutions platform OneTru. By Paula Rooney Apr 26, 2024 6 mins Financial Services Industry Digital Transformation Artificial Intelligence feature The 10 highest-paying industries for IT talent The tech industry isn’t the only hot spot for IT jobs, as there’s a growing demand for IT pros across every industry. These 10 verticals pay the most for IT roles, according to data from Dice. By Sarah K. White Apr 26, 2024 7 mins Salaries IT Jobs Careers brandpost Sponsored by Palo Alto Networks M&A action is gaining momentum, are your cloud security leaders prepared? Direct visibility is critical in M&A, and cloud-native application protection platforms (CNAPP) are ideal to provide this capability. By Amol Mathur, SVP & GM of Prisma Cloud, Palo Alto Networks Apr 25, 2024 4 mins Cloud Management news CIOs eager to scale AI despite difficulty demonstrating ROI, survey finds CIOs prioritize integrating AI into their organizations alongside cybersecurity, according to a new survey. By Sandeep Budki Apr 25, 2024 5 mins Artificial Intelligence PODCASTS VIDEOS RESOURCES EVENTS SUBSCRIBE TO OUR NEWSLETTER From our editors straight to your inbox Get started by entering your email address below. Please enter a valid email address Subscribe