Amazon's advertising revenue soared by an impressive 24% year-over-year in the third quarter, reaching $17.7 billion. This significant growth, which surpassed analyst expectations, underscores advertising's increasing importance as a profit driver for the tech giant. The strong performance aligns with a broader trend of major digital ad platforms maintaining robust demand amidst ongoing economic uncertainties.
Mirroring trends seen across other Big Tech earnings reports this week, Amazon highlighted its escalating investments in artificial intelligence (AI). This advanced technology is becoming increasingly integrated into the e-commerce behemoth's advertising infrastructure, a strategic move that contributed to a positive market reaction and a rise in Amazon's stock following the upbeat report.
Generative AI and Ad Innovation
In September, Amazon launched a generative AI-powered agent within its Creative Studio. This tool assists marketers throughout the campaign development process, from initial product research to generating creative assets and deploying media across Amazon Ads properties. These capabilities are bolstered by existing AI-driven image, video, and audio generators. Reflecting its commitment to AI, Amazon increased its projected capital expenditures for the full year to $125 billion, up from a previous estimate of $118 billion, with executives anticipating further increases in 2026 as the "AI arms race" continues.
Amazon DSP Reaches 'Fully Featured' Status
During an earnings call with analysts, Amazon CEO Andy Jassy highlighted the company's ability to connect brands with an ad-supported audience of over 300 million U.S. consumers. Jassy specifically lauded the significant momentum of Amazon's Demand-Side Platform (DSP). He noted that the DSP has expanded considerably beyond its origins in retail media, now supporting major streaming and audio services such as Roku, Netflix, Spotify, and SiriusXM. According to Jassy, Amazon has diligently addressed previous gaps in its DSP over the past 20 months, resulting in an ad-tech offering that is now "fully featured."
Live Sports Content Fuels Advertiser Interest
Jassy also emphasized the increasing advertiser interest generated by Amazon's expanding portfolio of live sports content on Prime Video, including NBA and NFL games. This content is proving effective in attracting advertisers at the top of the marketing funnel, a strategic area of growth for the company. Amazon reported exceeding its expectations for recent upfront commitments, which involve publishers and platforms securing substantial ad-spending deals with media buyers.
“Every single one of our advertising offerings this quarter grew in a meaningful way,” Jassy stated during the earnings call.
Rufus AI Assistant Shows Strong Consumer Traction
Beyond advertising, Amazon's broader AI initiatives are also resonating strongly with consumers. Rufus, an AI shopping assistant, has already been utilized by 250 million active customers this year. Despite only becoming widely available in the U.S. in September 2024, interactions with Rufus surged by 210% year-over-year in Q3. Amazon reports that shoppers engaging with Rufus are 60% more likely to make a purchase, with the tool projected to generate over $10 billion in incremental annualized sales.
Looking ahead, Jassy indicated Amazon's plans to collaborate with third-party agents.
“We’re also having conversations with and expect over time to partner with third-party agents,” Jassy remarked. “I think that it reminds me in some ways of the beginning of search engines many years ago being sources of discovery for commerce.”
