### Amazon's Q3 Earnings in the Spotlight: Cloud and AI Drive Growth Amidst Big Tech Rivals

As Amazon (AMZN) gears up to release its quarterly earnings report following the closing bell on Thursday, all eyes are on the performance of its cloud business, Amazon Web Services (AWS), and advancements in artificial intelligence (AI). This comes right after Alphabet's impressive earnings, marking a significant week for Big Tech amidst ongoing market data delays.

Investors are particularly keen on AWS as Amazon strives to maintain its leadership in the cloud sector while integrating new AI technologies to boost revenues. Like its competitors Microsoft (MSFT) and Alphabet (GOOGL, GOOG), Amazon is heavily investing in data infrastructure to meet growing enterprise demand and capitalize on the burgeoning AI market. The company's leadership has already claimed that its AI initiatives have generated substantial income for AWS. As a result, further investments are planned, especially in generative AI tools, with projections indicating that AWS is on track to generate over $105 billion this year.

Sky Canaves, a principal analyst at eMarketer, emphasized the importance of AWS’s continued growth. "Much of the anticipation is riding on AWS and whether the cloud business will see ongoing acceleration as it did in previous quarters," Canaves noted. Amazon’s strategic investments in cloud services ensure its dominance, with a significant portion of enterprise infrastructure yet to migrate to the cloud.

Additionally, Amazon's digital advertising segment is another focal point for industry watchers. Despite robust overall growth last quarter, Wall Street showed disappointment when sales targets, including those from advertising, were not met. Analysts from Bank of America warned that deceleration in advertising and a slower-than-expected rollout of ad services on Prime Video could present risks. However, Amazon is still in the nascent stages of developing its video ad business.

Arun Sundaram, a senior equity analyst at CFRA Research, maintains a positive long-term outlook on Amazon, highlighting it as a "compelling and durable multi-year profit and free cash flow (FCF) story." Nevertheless, he acknowledges several challenges, such as legal and regulatory hurdles, increasing competition in e-commerce, and substantial investments in Prime Video and generative AI.

Alphabet's robust performance, especially in cloud and advertising sectors, sets a challenging benchmark for Amazon. On the other hand, Microsoft and Meta (META) experienced stock declines due to increased spending on AI, despite surpassing earnings expectations. Notably, Meta projected significant capital expenditures growth in 2025, mirroring concerns over Amazon's upcoming capital expenditure plans.

With Amazon stock showing nearly 30% gains this year, making it the third-best performer among the "Magnificent Seven" tech giants, behind only Meta and Nvidia (NVDA), the market eagerly awaits how Amazon will fare in its latest financial report.