• Amazon shares surged in extended trading after the company reported better-than-expected earnings and revenue.
• The company's cloud and advertising units showed strong growth.

Amazon reported better-than-expected earnings and revenue for the third quarter, driven by growth in its cloud computing and advertising businesses. The stock was up about 7% on Friday morning.

Here are the results.

• Earnings: $1.43 vs $1.14 per share expected by LSEG
• Revenue: $158.88 billion vs $157.2 billion expected by LSEG

Wall Street is also watching several other numbers in the report:

• Amazon Web Services: $27.4 billion vs. $27.5 billion expected, according to StreetAccount
• Advertising: $14.3 billion vs. $14.3 billion expected, according to StreetAccount

In cloud, Amazon Web Services revenue was a hair below consensus estimates, but it's growing faster than the same period last year. Sales grew 19% during the quarter compared to a year ago when sales accelerated by 12%. The company was navigating slowing growth in its cloud business last year as customers trimmed their budgets due to heightened economic concerns.

AWS is still growing at a slower rate than its top challengers. Revenue from Azure and other cloud services at Microsoft came in at 33%, and Alphabet's Google Cloud revenue increased nearly 35%.

Amazon's capital expenditures surged 81% year-over-year from $12.48 billion to $22.62 billion as it continues to invest in data centers and equipment like Nvidia GPUs to power its artificial intelligence products. Amazon has launched several AI products in its cloud and e-commerce businesses, and it's also expected to announce a new version of its Alexa voice assistant powered by generative AI. The company's chief financial officer Brian Olsavsky said on an earnings call that the majority of the company's 2024 capex spending is to support the growing need for technology infrastructure.

Amazon CEO Andy Jassy said the company plans to spend about $75 billion on capex in 2024 and that he suspects the company will spend more in 2025. "The increase bumps here are really driven by generative AI," Jassy said during a call with analysts.

"It is a really unusually large, maybe once-in-a-lifetime type of opportunity," he said, noting that shareholders "will feel good about this long term, that we're aggressively pursuing it."

Advertising was another bright spot in the report. Sales in the unit expanded 19% year over year to $14.3 billion during the quarter, outpacing growth in Amazon's core retail business.

Amazon and Apple, which also reported quarterly results on Thursday, round out a busy week of earnings for the top tech companies. Alphabet on Tuesday reported better-than-expected results, driven by cloud growth. Microsoft issued disappointing guidance on Wednesday, leading to the stock's steepest selloff in two years, while Meta beat estimates but warned of significant acceleration in its infrastructure expenses next year.

Among online ad companies, Amazon showed the strongest growth, although its ad business still remains a fraction the size of juggernauts Meta and Google. Meta's advertising revenue grew 18.7% year over year, while Google's advertising business increased 15% in the quarter. Snap's sales jumped 15% from a year earlier.

Amazon forecast revenue in the current quarter to be between $181.5 billion and $188.5 billion, which would represent growth of 7% to 11% year over year. The midpoint of that range, $185 billion, fell short of the average analyst estimate of $186.2 billion, according to LSEG.

Operating income during the third quarter grew 56% year over year to $17.4 billion, showing that Amazon's focus on efficiency and continued cost-cutting continues to lift the bottom line. Jassy has been laser-focused on trimming expenses across the company, cutting more than 27,000 jobs since the beginning of 2022. Amazon has continued to restructure its teams this year.

Wall Street has applauded Jassy's campaign to rein in expenses, with Amazon shares up about 23% year to date. The Nasdaq has gained roughly 27% over the same stretch.