Amazon’s cloud business, Amazon Web Services (AWS), reported revenue of $19.74 billion in the second quarter, a 33% increase year-over-year. In addition, the company beat analyst expectations of $19.56 billion in revenue for the quarter. However, the company’s growth rate of 33% was down from the 37% growth rate AWS reported in the first quarter.
Amazon executives said that AWS continues to grow at a fast pace and the company sees a lot of promise in the enterprise and public sector adoption of the cloud. And because of that demand, AWS will continue to make investments in cloud infrastructure and expand to new regions.
Brian Olsavsky, SVP and CFO of Amazon, told investors that in 2021 Amazon incurred $60 billion in capital investments and about 40% of that went to technology infrastructure, primarily supporting AWS. In 2022, Olsavsky said that Amazon expects to its capital investments to be slightly higher and that more than half of the 2022 capital investments will go toward technology infrastructure to support the rapid growth of AWS.
For example, AWS currently supports 84 availability zones in 26 geographic regions and the company plans to add 24 more availability zones in eight regions bringing its total to 108 zones.
Olsavskey also said that he expects revenue and margins for AWS to continue to fluctuate quarter to quarter as more and more companies convert to the cloud.AWS also reported $5.72 billion in operating income, a 36% increase year over year. The company said that its costs are increasing, as wages are rising due to high demand for engineers and other tech workers. In addition, AWS also noted it is paying higher electricity rates in its data centers.
Amazon reported overall revenues of $121.23 billion, which was 7% higher than the $113.1 billion the company reported in the second quarter of 2021. The company also said its operating income decreased to $3.3 billion in 2Q, compared to $7.7 billion in 2Q 2021.
AWS remains on top
One thing AWS is not seeing is any threat to its leadership in the cloud market. Synergy Research Group released new data for Q2 indicating that AWS has increased its market share by more than a full percentage point to 34%. AWS, Microsoft Azure and Google Cloud now account for a combined 65% of the worldwide cloud market, up from 61% in 2Q 2021. And in the public cloud market, AWS, Microsoft Azure and Google Cloud have an even greater market share, controlling 72% of the market, Synergy said.
The research firm estimates that quarterly cloud revenue (including infrastructure-as-a-service, platform-as-a-service, and hosted private cloud services) topped $54.7 billion, an increase of 29% from last year.
And although cloud providers are not immune to the macro-economic climate, John Dinsdale, chief analyst at Synergy, said that the underlying growth in cloud usage continues to grow at “truly impressive rates.”