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 Canon NZ Why your business needs a cloud-based print management solution If your business isn’t using a cloud-based print management solution, you’re missing out on a range of efficiency, environmental and security benefits. By Canon New Zealand 02 May 2024 5 mins Managed Cloud Services opinion The cyber pandemic: AI deepfakes and the future of security and identity verification Attackers have seen huge success using AI deepfakes for injection and presentation attacks – which means we’ll only see more of them. Advanced technology can help prevent (not just detect them). By Aaron Painter 02 May 2024 5 mins Artificial Intelligence Security brandpost Sponsored by Cisco Transform the modern data center: From today to the future Embrace agility, elasticity, and cognitive intelligence capabilities for a data center strategy that’s performance-ready and sustainable for the future. By Murali Gandluru 02 May 2024 4 mins Networking brandpost Sponsored by TCS and Microsoft 5 keys to optimizing ROI on your Cloud Center of Excellence 5 keys to optimizing ROI on your Cloud Center of Excellence CoE adoption is on the rise – but success means evaluating relevance, staying connected, building a strong team, continuous innovation, and transforming culture. By Tata Consultancy Services 02 May 2024 2 mins Manufacturing Industry Cloud Computing 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