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 brandpost Sponsored by VMware How to build a successful agile development culture - and why your business needs one Mastering agile: Addressing familiar challenges and common misconceptions for successful software development. By Mike Freedman, Senior Director, and Michael Coté, Senior Member of Technical Staff, VMware Tanzu by Broadcom May 20, 2024 6 mins Devops Software Development brandpost Sponsored by Broadcom Driving digital transformation success: Serge Lucio's insights on Value Stream Management Navigating the VSM landscape: Strategies for seamless digital transformation—a chat with Serge Lucio, General Manager of the Agile Operations Division at Broadcom By Marla Schimke, Head of Product and Growth Marketing, Broadcom's ValueOps Software Division May 20, 2024 4 mins Digital Transformation feature 10 projects top of mind for IT leaders today From embracing AI to modernizing infrastructure, IT leaders are focusing more on key business differentiators, risk mitigation, emerging issues, and transforming IT to accelerate change. By Mary Pratt May 20, 2024 11 mins Business IT Alignment Data and Information Security IT Strategy opinion Assembly required: 8 myths about knowledge management debunked Business leaders intent on fostering innovative cultures must differentiate between knowledge management and knowledge assembly. One involves systems, data, and collaboration; the other, insights, dialogue, serendipity, and courses of action. By Daniel Forrester and Jerold Zimmerman May 20, 2024 13 mins Content Management Systems Document Management Systems Staff Management 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