Ad sales

Amazon's recent earnings report for Q3 2024 shows a significant boost in ad sales. The company reported that advertising revenue rose 19% year-over-year, hitting $14.3 billion. This figure narrowly exceeded analysts' expectations, who had predicted around $14.25 billion.

Amazon said this growth in advertising is due to new ad placements. These include slots on shopping carts in stores and ads on Prime Video. Its ad services target clients, including sellers, vendors, and publishers, using programs like sponsored ads, display ads, and video ads.

Amazon's online ad business is smaller than those of rivals like Google's Alphabet and Meta. According to eMarketer, Google dominates the global digital advertising market with a 27.7% share, followed by Meta at 22.8% and Amazon at 8.8%.

Google’s Alphabet reported third-quarter ad revenue of $65.85 billion, a 10% increase from the previous year. Meta also saw growth, with third-quarter advertising revenue reaching $39.9 billion, an increase of 19% that exceeded expectations. 

Subscription services

Amazon’s subscription services reported an 11% increase in revenue to $11.3 billion. This is driven by Prime memberships. The platform plans to increase its ad revenue by taking advantage of the growing streaming market. In 2025, Amazon will add more ads on Prime Video.

Overall sales

Amazon's total net sales in Q3 rose 11% year-over-year to $158.9 billion, with net income increasing 55% to $15.3 billion. 

Cloud unit performance

The company’s cloud division generated $27.5 billion in revenue, a 19% increase. The operating income from this unit reached $10.4 billion, exceeding analysts’ average projection of $9.12 billion. 

In contrast, Alphabet and Microsoft reported differing results for their cloud segments. Google's cloud revenue was $11.4 billion, a 35% increase, exceeding forecasts. Microsoft's cloud growth is projected to slow.

Despite strong earnings, Amazon faces competition from discount retailers like Shein and Temu. It aims to gain market share and attract customers following a decline in retail sales. Recent reports say it plans to launch a low-priced storefront with strict price caps on various products. 

The company is also enhancing its shopping features. It introduced an AI-powered shopping assistant named Rufus. In August, Amazon integrated in-app shopping with TikTok and Pinterest, allowing users to purchase items directly through these apps.

Last month, it launched a generative AI tool for audio ads for U.S. advertisers. Amazon said the tool will allow advertisers to create ads quickly. The feature is available in beta. 

For Q4, Amazon plans to invest around $75 billion in capital expenditures, with projected sales reaching up to $188.5 billion.

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