What's going on?

Who�s delivered more than $1 billion in profit four quarters in a row? Amazon, that�s who. On Thursday, its third-quarter results beat expectations � but a mixed outlook led the stock to fall 6% (tweet this).

What does this mean?

Amazon�s profit last quarter was stratospheric, in part thanks to Amazon Web Services, its cloud computing segment. That business grew revenue 46% versus the same time last year � impressive, considering Amazon�s already the largest player in cloud computing, and rival Microsoft’s jostling for position (on Wednesday, it said its own cloud business grew by almost 90%). Continued growth in cloud city is important for Amazon�s profit because it has low incremental costs � meaning it�s pretty easy for Amazon to sell more services to customers without spending much more money.


Ecommerce wasn�t great, for a change: sales grew by 35% in North America but only 13% internationally, below expectations � perhaps hit by high-profile tech issues during Amazon�s flash sale day in July.

Why should I care?

For markets: Investors are still looking for a hero.

Amazon�s stock�s risen over 50% this year � bested only by Netflix among the major tech companies. US tech stocks account for about a quarter of the market, and some investors hope a few good quarters from big tech could stem or even reverse the market�s recent decline. But Amazon isn�t playing ball: its stock fell as it said next quarter�s sales would be lower than investors forecast � with one reason being unfavorable exchange rates.

The bigger picture: Getting loud in the cloud.

Cloud computing�s attractive because it generates a steady stream of cash via subscriptions � which is probably why big companies are going for hell for leather after a slice of the fast-growing pie. Amazon�s been busy cutting prices (surprise, surprise) to win new customers and encourage existing clients to buy additional services � and its competitors in advertising are worried it might now be trying the same tricks there…