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Amazon Shares Surge On Optimism About Cloud-Computing Revenue

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Amazon shares jumped more than 5 percent after the company provided results for its cloud-computing business for the first time and showed it to be more profitable than investors expected.

Profits have long been elusive for Amazon, and the company posted another loss in the most recent quarter. Amazon said it had a net loss of $57 million, or 12 cents a share, in the quarter ended March 31, compared with net income of $108 million, or 23 cents, a year earlier.

But now Amazon has provided financial details for its cloud division, known as Amazon Web Services, that allows businesses to use Amazon’s computers instead of running their own. AWS net sales totaled $1.57 billion, with an operating profit of $265 million.

Morningstar analyst R.J. Hottovy says investors were pleasantly surprised.

“It’s shown to be much more profitable than what much of the market had anticipated,” Hottovy said.

Hottovy says investors are excited for the growth prospects for Amazon’s cloud business because companies are increasingly deciding it’s easier to tap into data centers than run their own machines.

Amazon’s major rivals in cloud computing are Microsoft, Google and IBM.

Microsoft said “commercial cloud” revenue doubled in the quarter that ended March 31. But the company didn’t provide detailed profit or sales numbers for its cloud business. 

In July 2017, Ashley Gross became KNKX's youth and education reporter after years of covering the business and labor beat. She joined the station in May 2012 and previously worked five years at WBEZ in Chicago, where she reported on business and the economy. Her work telling the human side of the mortgage crisis garnered awards from the Illinois Associated Press and the Chicago Headline Club. She's also reported for the Alaska Public Radio Network in Anchorage and for Bloomberg News in San Francisco.