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Andy Jassy, CEO Amazon Web Services, speaks at the WSJD Live conference in Laguna Beach, California, October 25, 2016.

Mike Blake | Reuters

Amazon reported third-quarter earnings and revenue on Thursday that sailed past analysts’ estimates. The stock initially popped in extended trading, but then gave up most of its gains.

Here are the results:

  • Earnings per share: 94 cents per share vs. 58 cents per share expected by LSEG, formerly known as Refinitiv.
  • Revenue: $143.1 billion vs. $141.4 billion expected by LSEG.

Investors are also following these segment numbers:

  • Amazon Web Services: $23.1 billion vs. $23.2 billion in expected revenue, according to StreetAccount
  • Advertising: $12.1 billion vs. $11.6 billion in expected revenue, according to StreetAccount

Amazon said fourth-quarter sales, which include the key holiday period, will be between $160 billion and $167 billion. Analysts were expecting revenue of $166.6 billion, according to LSEG. At the mid-point of its guidance range, revenue of $163.5 billion would represent growth of 9.6% from $149.2 billion a year earlier.

Revenue climbed 13% in the third quarter, a sign that the business is seeing some acceleration after a difficult 2022 that was marred by soaring inflation and rising interest rates.

Amazon has been in cost-cutting mode for the past year as it became clear that it expanded too quickly during the pandemic. The company has laid off 27,000 employees since last fall, and it’s axed some of its more unprofitable bets.

CEO Andy Jassy, who succeeded founder Jeff Bezos at the helm in mid-2021, said those belt-tightening efforts continue to bear fruit.

“We had a strong third quarter as our cost to serve and speed of delivery in our Stores business took another step forward, our AWS growth continued to stabilize, our Advertising revenue grew robustly, and overall operating income and free cash flow rose significantly,” Jassy said in a statement.

Sales in Amazon’s core e-commerce business continued to recover, expanding 7% year over year, after growing 4% in the previous quarter. The September quarter includes the results of this year’s Prime Day promotion, which took place in July. Amazon described it as its “biggest ever” sale.

Net income more than tripled to $9.9 billion, or 94 cents a share, from $2.9 billion, or 28 cents a share, a year earlier. Net income for the quarter includes pre-tax valuation gain of $1.2 billion from the company’s investment in electric car company Rivian.

Amazon’s results follow better-than-expected numbers from Alphabet and Meta earlier this week. However, shares of both of those companies fell after their earnings reports. Alphabet investors were concerned about disappointing revenue in the Google Cloud division, while Meta’s selloff resulted from cautionary comments regarding the ad market in light of the escalating conflict in the Middle East.

Amazon shares fell more than 6% over the past two trading days, as the response to Alphabet and Meta’s numbers hit their mega-cap tech peers.

Digital advertising continues to be a bright spot for Amazon, as third-party sellers and large brands bolster their ad spending to improve visibility in an increasingly competitive marketplace. Ad revenue increased 26% from a year earlier. That’s much faster than Google’s ad growth, which was 9%, and topped Facebook’s ad growth of 23%. Snap said revenue rose just 5%.

In cloud, however, Amazon appears to be giving up some market share. Amazon Web Services, which leads Microsoft Azure and Google Cloud, showed growth in the quarter of 12%. Microsoft earlier this week said Azure revenue jumped 29%, and Google Cloud expanded by 22%.

WATCH: The market now sees Amazon as more of a cloud and generative AI company

The market now sees Amazon as more of a cloud and generative AI company, says Needham's Laura Martin

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Spotify stock falls on revenue miss, lackluster guidance

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Spotify stock falls on revenue miss, lackluster guidance

Thomas Fuller | Lightrocket | Getty Images

Spotify shares dropped about 4% Tuesday after the music streaming platform fell short of Wall Street’s expectations and posted weak guidance for the current quarter.

Here’s how the company did versus LSEG estimates:

  • Loss: Loss of .42 euros vs earnings of 1.90 euros per share expected
  • Revenue: 4.19 billion euros vs. 4.26 billion expected

The Sweden-based music platform’s revenues rose 10% from about 3.81 billion euros in the year-ago period. The company posted a net loss of 86 million euros, or a loss of .42 euros per share, down from net income of 225 million euros, or 1.10 euros per share a year ago.

Third-quarter guidance came up short of Wall Street’s forecast.

The company expects revenues to reach 4.2 billion euros, compared to a 4.47 billion euro estimate from StreetAccount. Spotify said the forecast accounts for a 490-basis-point headwind due to foreign exchange rates.

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Monthly active users on the platform jumped 11% to 696 million, while paying subscribers rose 12% from a year ago to 276 million.

For the current quarter, Spotify said it expects to reach 710 million monthly active users, with 14 million net adds. The company expects 5 million net new premium subscribers in the third quarter to reach 281 million subscriptions.

During the period, Spotify said it rolled out a request feature for its artificial intelligence DJ. The company said engagement with the offering has roughly doubled over the last year.

In 2024, Spotify posted its first full year of profitability. Shares are up 57% this year.

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Samsung backs South Korean AI chip startup Rebellions ahead of IPO

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Samsung backs South Korean AI chip startup Rebellions ahead of IPO

The Rebel-Quad is the second-generation product from Rebellions and is made up of four Rebel AI chips. Rebellions, a South Korean firm, is looking to rival companies like Nvidia in AI chips.

Rebellions

South Korean artificial intelligence chip startup Rebellions has raised money from tech giant Samsung and is targeting a funding round of up to $200 million ahead of a public listing, the company’s management told CNBC on Tuesday.

Last year, Rebellions merged with another startup in South Korea called Sapeon, creating a firm that is being positioned as one of the country’s promising rivals to Nvidia.

Rebellions is currently raising money and is targeting funding of between $150 million and $200 million, Sungkyue Shin, chief financial officer of the startup, told CNBC on Tuesday.

Samsung’s investment in Rebellions last week was part of that, Shin said, though he declined to say how much the tech giant poured in.

Since its founding in 2020, Rebellions has raised $220 million, Shin added.

The current funding round is ongoing and Shin said Rebellions is talking to its current investors as well as investors in Korea and globally to participate in the capital raise. Rebellions has some big investors, including South Korean chip giant SK Hynix, telecommunication firms SK Telecom and Korea Telecom, and Saudi Arabian oil giant Aramco.

AI chip startup Rebellions looks to raise up to $200 million ahead of IPO

Rebellions was last valued at $1 billion. Shin said the current round of funding would push the valuation over $1 billion but declined to give specific figure.

Rebellions is aiming for an initial public offering once this funding round has closed.

“Our master plan is going public,” Shin said.

Rebellions designs chips that are focused on AI inferencing rather than training. Inferencing is when a pre-trained AI model interprets live data to come up with a result, much like the answers that are produced by popular chatbots.

With the backing of major South Korean firms and investors, Rebellions is hoping to make a global play where it will look to challenge Nvidia and AMD as well as a slew of other startups in the inferencing space.

Samsung collaboration

Rebellions has been working with Samsung to bring its second-generation chip, Rebel, to market. Samsung owns a chip manufacturing business, also known as foundry. Four Rebel chips are put together to make the Rebel-Quad, the product that Rebellions will eventually sell. A Rebellions spokesperson said the chip will be launched later this year.

The funding will partly go toward Rebellions’ product development. Rebellions is currently testing its chip which will eventually be produced on a larger scale by Samsung.

“Initial results have been very promising,” Sunghyun Park, CEO of Rebellions, told CNBC on Tuesday.

South Korean AI startup Rebellions says tariffs could delay IPO by 'a little bit'

Park said Samsung invested in Rebellions partly because of the the good results that the chip has so far produced.

Samsung is manufacturing Rebellions’ semiconductor using its 4 nanometer process, which is among the leading-edge chipmaking nodes. For comparison, Nvidia’s current Blackwell chips use the 4 nanometer process from Taiwan Semiconductor Manufacturing Co. Rebellions will also use Samsung’s high bandwidth memory, known as HBM3e. This type of memory is stacked and is required to handle large data processing loads.

That could turn out to be a strategic win for Samsung, which is a very distant second to TSMC in terms of market share in the foundry business. Samsung has been looking to boost its chipmaking division. Samsung Electronics recently entered into a $16.5 billion contract for supplying semiconductors to Tesla.

If Rebellions manages to find a large customer base, this could give Samsung a major customer for its foundry business.

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Europe sets its sights on multi-billion-euro gigawatt factories as it plays catch-up on AI

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Europe sets its sights on multi-billion-euro gigawatt factories as it plays catch-up on AI

Data storage tapes are stored at the National Energy Research Scientific Computing Center (NERSC) facility at the Lawrence Berkeley National Laboratory, which will house the U.S. supercomputer to be powered by Nvidia’s forthcoming Vera Rubin chips, in Berkeley, California, U.S. May 29, 2025.

Manuel Orbegozo | Reuters

Europe is setting its sights on gigawatt factories in a bid to bolster its lagging artificial intelligence industry and meet the challenges of a rapidly-changing sector.

Buzz around the concept of factories that industrialize manufacturing AI has gained ground in recent months, particularly as Nvidia CEO Jensen Huang stressed the importance of the infrastructure at a June event. Huang hailed a new “industrial revolution” at the GTC conference in Paris, France, and said his firm was working to help countries build revenue-generating AI factories through partnerships in France, Italy and the U.K.

For its part, the European Union describes the factories as a “dynamic ecosystem” that brings together computing power, data and talent to create AI models and applications.

The bloc has long been a laggard behind the U.S. and China in the race to scale up artificial intelligence. With 27 members in the union, the region is slower to act when it comes to agreeing new legislation. Higher energy costs, permitting delays and a grid in dire need of modernization can also hamper developments.

Henna Virkkunen, the European Commission’s executive vice president for tech sovereignty, told CNBC that the bloc’s goal is to bring together high quality data sets, computing capacity and researchers, all in one place.

“We have, for example, 30% more researchers per capita than the U.S. has, focused on AI. Also we have around 7,000 startups [that] are developing AI, but the main obstacle for them is that they have very limited computing capacity. And that’s why we decided that, together with our member states, we are investing in this very crucial infrastructure,” she said.

These are very big investments because they are four times more powerful when it comes to computing capacities than the biggest AI factories.

Henna Virkkunen

European Commission’s executive vice president for tech sovereignty

“We have everything what is needed to be competitive in this sector, but at the same time we want to build up our technological sovereignty and our competitiveness.”

So far, the EU has put up 10 billion euros ($11.8 billion) in funding to set up 13 AI factories and 20 billion euros as a starting point for investment in the gigafactories, marking what it says is the “largest public investment in AI in the world.” The bloc has already received 76 expressions of interest in the gigafactories from 16 member states across 60 sites, Virkkunen said.

The call for interest in gigafactories was “overwhelming,” going far beyond the bloc’s expectations, Virkkunen noted. However, in order for the factories to make a noteworthy addition to Europe’s computing capacity, significantly more investment will be required from the private sector to fund the expensive infrastructure.

‘Intelligence revolution’

The EU describes the facilities as a “one-stop shop” for AI firms. They’re intended to mirror the process carried out in industrial factories, which transform raw materials into goods and services. With an AI factory, raw data goes into the input, and advanced AI products are the expected outcome.

It’s essentially a data center with additional infrastructure related to how the technology will be adopted, according to Andre Kukhnin, equity research analyst at UBS.

“The idea is to create GPU [graphics processing units] capacity, so to basically build data centers with GPUs that can train models and run inference… and then to create an infrastructure that allows you to make this accessible to SMEs and parties that would not be able to just go and build their own,” Kukhnin said.

How the facility will be used is key to its designation as an AI factory, adds Martin Wilkie, research analyst at Citi.

“You’re creating a platform by having these chips that have insane levels of compute capacity,” he said. “And if you’ve attached it to a grid that is able to get the power to actually use them to full capacity, then the world is at your feet. You have this enormous ability to do something, but what the success of it is, will be defined by what you use it for.”

Telecommunications firm Telenor is already exploring possible use cases for such facilities with the launch of its AI factory in Norway in November last year. The company currently has a small cluster of GPUs up and running, as it looks to test the market before scaling up.

Telenor’s Chief Innovation Officer and Head of the AI Factory Kaaren Hilsen and EVP Infrastructure Jannicke Hilland in front of a Nvidia rack at the firm’s AI factory

Telenor

“The journey started with a belief — Nvidia had a belief that every country needs to produce its own intelligence,” Telenor’s Chief Innovation Officer and Head of the AI Factory Kaaren Hilsen told CNBC.

Hilsen stressed that data sovereignty is key. “If you want to use AI to innovate and to make business more efficient, then you’re potentially putting business critical and business sensitive information into these AI models,” she said.

The company is working with BabelSpeak, which Hilsen described as a Norwegian version of ChatGPT. The technology translates sensitive dialogues, such as its pilot with the border police who can’t use public translation services because of security issues.

We’re experiencing an “intelligence revolution” whereby “sovereign AI factories can really help advance society,” Hilsen said.

Billion-euro investments

Virkkunen said the region’s first AI factory will be operational in coming weeks, with one of the biggest projects launching in Munich, Germany in the first days of September. It’s a different story for the gigafactories.

“These are very big investments because they are four times more powerful when it comes to computing capacities than the biggest AI factories, and it means billions in investments. Each of these need three to five billion [euros] in investment,” the commissioner said, adding that the bloc will look to set up a consortium of partners and then officially open a call for investment later this year.

Bertin Martens, senior research fellow at Bruegel, questioned why such investments needed to subsidized by government funds.

“We don’t know yet how much private investment has been proposed as a complement to the taxpayer subsidy, and what capacity and how big these factories are. This is still very much unclear at this stage, so it’s very hard to say how much this will add in terms of computing capacity,” he said.

Power consumption is also a key issue. Martens noted that building an AI gigafactory may take one to two years — but building a power generation of that size requires much more time.

“If you want to build a state-of-the-art gigafactory with hundreds of thousands of Nvidia chips, you have to count on the power consumption of at least one gigawatt for one of those factories. Whether there’s enough space in Europe’s electricity grid in all of these countries to create those factories remains to be seen… this will require major investment in power regeneration capacity,” he told CNBC.

UBS forecasts that the current installed global data center capacity of 85 GW will double due to soaring demand. Based on the EU’s 20-billion-euro investment and the plan for each factory to run 100,000 advanced processors, UBS estimates each factory could be around 100-150 MW with a total capacity for all of the facilities of around 1.5-2 GW.

That could add around 15% to Europe’s total capacity — a sizeable boost, even when compared to the U.S., which currently owns around a third of global capacity, according to the data.

Following the announcement of the EU-U.S. trade framework, EU chief Ursula von der Leyen said Sunday that U.S. AI chips will help power the bloc’s AI gigafactories in a bid to help the States “maintain their technological edge.”

“One could argue that it’s relatively easy, provided you have the money. It’s relatively easy to buy the chips from Nvidia and to create these hardware factories, but to make it run and to make it economically viable is a completely different question,” Martens told CNBC.

He said that the EU will likely have to start at a smaller scale, as the region is unable to immediately build its own frontier models in AI because of their expense.

“I think in time, Europe can gradually build up its infrastructure and its business models around AI to reach that stage, but that will not happen immediately,” Martens said.

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