Amazon Web Services makes nearly 67% of Amazon’s operating profit in blockbuster quarter

Amazon Web Services posted net sales of nearly $10 billion and operating profit of $2.6 billion in the fourth quarter, representing nearly 67 percent of the tech giant’s entire operating profit

The big quarter might not reduce the sting of Amazon’s loss of the Pentagon’s $10 billion cloud contract to Microsoft in the fourth quarter, but the top-line increase of 34% in sales surprised analysts and underscored the notion that Amazon Web Services still has plenty of room for growth, even as rivals such as Microsoft Azure and Google Cloud make progress of their own.

Independent analyst Patrick Moorhead of Moor Insights Strategy called it an “exceptional quarter,” pointing out that AWS’s growth of $2.5 billion in net sales for the quarter is larger than the overall annual revenue posted by many cloud companies. On an annual basis, he noted, the division’s quarterly result would make it a $40 billion business.

Amazon and other major cloud platforms are benefiting from a continued shift of business computing from traditional data centers and in-house servers to the public cloud. Moving companies into the cloud has become a major focus for Amazon Web Services executives, targeting the estimated $3.7 trillion market for enterprise IT globally.

Looking ahead, Amazon pointed to signs of more growth for its cloud business. On a conference call with reporters, Amazon chief financial officer Brian Olsavsky said the company’s balance sheet in its annual Form 10-K report would show that future customer commitments for AWS services, the balance of multi-year deals, has increased to $30 billion, up 54 percent.

“We continue to see a lot of momentum with customers across a wide range of industries, from startups to enterprise customers and public sector,” he said.

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