Amazon's Q3 ad revenue up 19% YoY to $14.3 billion, AI takes center stage

Amazon has exceeded analysts' expectations in its third quarter, with advertising revenue hitting $14.3 billion, marking a robust 19% year-over-year increase. The e-commerce giant's strategic move to incorporate advertisements into Prime Video appears to be paying dividends, narrowly beating market predictions of $14.25 billion.

The Seattle-based company's overall performance showed remarkable strength, with total net sales reaching $158.9 billion, an 11% increase compared to the same period last year. This growth persisted despite a $0.2 billion headwind from foreign exchange fluctuations.

In a significant announcement, CEO Andy Jassy highlighted the company's commitment to artificial intelligence, revealing plans to unveil "over 100 new cloud infrastructure and AI capabilities" at the upcoming AWS re:Invent conference, scheduled for the week after Thanksgiving.

The company's subscription services, which include Prime membership, witnessed an 11% uptick, generating $11.3 billion in revenue during the July-September quarter.

Regional performance demonstrated strong momentum, with North American operations posting sales of $95.5 billion, a 9% year-over-year increase, whilst the International segment grew by 12% to reach $35.9 billion.

Perhaps most notably, Amazon's operating income saw a dramatic improvement, climbing to $17.4 billion from $11.2 billion in the previous year's third quarter. The International segment turned around its previous year's loss of $0.1 billion to post an operating income of $1.3 billion, whilst North American operations contributed $5.7 billion, up from $4.3 billion in the same period last year.

Looking ahead to the festive season, Jassy expressed optimism about upcoming initiatives, including the company's NFL Black Friday game and Election Day coverage with Brian Williams on Prime Video, following what he described as their "biggest-ever Prime Big Deal Days" and a successful launch of new Kindle devices.