Thank you for standing by. Good day, everyone, and welcome to the Amazon.com Third Quarter 2025 Financial Results Teleconference. Today's call is being recorded. And for opening remarks, I will be turning the call over to the Vice President of Investor Relations, Mr. Dave Fildes. Thank you, sir. Please go ahead.

Hello, and welcome to our Q3 2025 financial results conference call. Joining us today to answer your questions is Andy Jassy, our CEO; and Brian Olsavsky, our CFO. As you listen to today's conference call, we encourage you to have our press release in front of you, which includes our financial results as well as metrics and commentary on the quarter. Please note, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2024. Our comments and responses to your questions reflect management's views as of today, October 30, 2025 only, and will include forward-looking statements. Actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in today's press release and our filings with the SEC, including our most recent annual report on Form 10-K and subsequent filings. During this call, we may discuss certain non-GAAP financial measures. In our press release, slides accompanying this webcast, and our filings with the SEC, each of which is posted on our IR website, you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures. Our guidance incorporates the order trends that we've seen to date and what we believe today to be appropriate assumptions. Our results are inherently unpredictable and may be materially affected by many factors, including fluctuations in foreign exchange rates, changes in global economic and geopolitical conditions, tariff and trade policies, and customer demand and spending, including the impact of recessionary fears; inflation, interest rates, regional labor market constraints, world events, the rate of growth of the Internet, online commerce, cloud services, and new and emerging technologies, and the various factors detailed in our filings with the SEC. Our guidance assumes, among other things, that we don't conclude any additional business acquisitions, restructurings, or legal settlements. It's not possible to accurately predict demand for our goods and services, and therefore, our actual results could differ materially from our guidance. And now I'll turn the call over to Andy.

Thanks, Dave. We saw strong growth across our business in Q3, and we're reporting $180.2 billion in revenue, up 12% year-over-year, excluding the impact from foreign exchange rates. Operating income was $17.4 billion, but would have been over $21 billion if not for 2 special Q3 expenses, $2.5 billion for an FTC settlement and $1.8 billion for estimated severance costs. Trailing 12-month free cash flow was $14.8 billion. I'll start with AWS. AWS is growing at a pace we haven't seen since 2022, reaccelerating to 20.2% year-over-year, our largest growth rate in 11 quarters. It's worth remembering that year-over-year percentage growth is a relative term. It's very different having 20% year-over-year growth on a $132 billion annualized run rate and to have a higher percentage growth rate on a meaningfully smaller annual revenue, which is the case with our competitors. Backlog grew to $200 billion by Q3 quarter end and doesn't include several unannounced new deals in October, which together are more than our total deal volume for all of Q3. AWS is gaining momentum. Customers want to be running their core and AI workloads in AWS given its stronger functionality, security, and operational performance and the scale I see in front of us gives me significant confidence in what lies ahead. I'll share a little more detail on why. It starts with AWS having much broader infrastructure functionality. Start-ups, enterprises, and governments want to move their production workloads to the place that has the broadest and deepest array of capabilities. AWS has more services and deeper features within those services than anybody else and continues to innovate at a rapid clip. These are key building blocks for anything that customers want to create, and they're a big part of why Gartner has named AWS leader in its strategic cloud platform services Magic Quadrant for 15 consecutive years. We're bringing the same building block approach to AI. SageMaker makes it much simpler for companies to build and deploy their own foundation models. Bedrock gives customers the leading selection of foundation models and superior price performance to deploy inference into their next-generation applications. A lot of the future value companies will get from AI will be in the form of agents. AWS is heavily investing in this area and is well positioned to be a leader. Companies will both create their own agents and use agents from other companies. For those building their own, it's been harder to build than it should be. It's why we launched strands to make it much easier to create agents from any foundation model that builders desire. For companies who successfully built agents, they've hesitated putting them into production because they lack secure scalable runtime services or memory or observability built specifically for agents. It's why we launched AgentCore, a set of infrastructure building blocks that allow builders to deploy secure, scalable agents. Ericsson used AgentCore to deliver AI agents across their workforce, Sony used it to build an agentic AI platform with enterprise-level security, observability, and scalability. Cohere Health is using AgentCore to deploy agents that will reduce medical review times by up to 30% to 40%. AgentCore's SDK has already been downloaded over 1 million times, and our builders are excited about it. It's an enabler. Companies will also use other agents, and AWS continues to build many of the agents we believe builders will use in the future. For coding, we've recently opened up our agentic coding IDE called Kiro. More than 100,000 developers jumped into Kiro in just the first few days of preview and that number has more than doubled since. It's processed trillions of tokens thus far, weekly actives are growing fast, and developers love its unique spec, tool call, and capabilities. For migration and transformation, we offer an agent called Transform. Year-to-date, customers have already used it to save 700,000 hours of manual effort, the equivalent of 335 developer years of work. For example, Thomson Reuters used it to transform 1.5 million lines of code per month, moving from Windows to open source alternatives and completing tasks organization times faster than with other migration tools. Customers have also already used Transform to analyze nearly 1 billion lines of mainframe code as they move mainframe applications to the cloud. For business customers, we've recently launched QuickSleep to bring a consumer AI-like experience to work, making it easy to find insights, conduct deep research, automate tasks, visualize data, and take actions. We've already seen users churn months-long projects in today's get 80% plus time savings on complex tasks and realize 90% plus cost savings. And for contact centers, we offer Amazon Connect which creates a more personalized and efficient experience for contact center agents, managers, and their customers. Connect has recently crested a $1 billion annualized revenue run rate with 12 billion minutes of customer interactions being handled by AI in the last year, and is being used by large enterprises like Capital One, Toyota, American Airlines, and Ryanair. These are real practical results for customers, and there are many more examples like them. Because of its advantaged capabilities, security, operational performance, and customer focus, AWS continues to earn most of the big enterprise and government transformations to the cloud. As a result, AWS is where the preponderance of company's data and workloads reside and part of why most companies want to run AI in AWS. To enable customers to do so, we need to have the requisite capacity, and we've been focused on accelerating capacity the last several months, adding more than 3.8 gigawatts of power in the past 12 months, more than any other cloud provider. To put that into perspective, we're now double the power capacity that AWS was in 2022, and we're on track to double again by 2027. In the last quarter of this year alone, we expect to add at least another gigawatt of power. This capacity consists of power, data center, and chips, primarily our custom silicon, Trainium and NVIDIA. We've recently brought Project Rainier Online, our massive AI compute cluster spanning multiple U.S. data centers and containing nearly 500,000 of our Trainium2 chips. Anthropic is using it now to build and deploy its industry-leading AI model, Claude, which we expect to be on more than 1 million Trainium2 chips by year-end. Trainium2 continues to see strong adoption, is fully subscribed, and is now a multibillion-dollar business that grew 150% quarter-over-quarter. Today, Trainium is being used by a small number of very large customers but we expect to accommodate more customers starting with Trainium3. We're building Bedrock to be the biggest inference engine in the world and in the long run, believe Bedrock could be as big a business for AWS as EC2, and the majority of token usage in Amazon Bedrock is already running on Trainium. We're also continuing to work closely with chip partners like NVIDIA, with whom we continue to order very significant amounts, as well as with AMD and Intel. These are very important partners with whom we expect to keep growing our relationships over time. You're going to see us continue to be very aggressive in investing in capacity because we see the demand. As fast as we're adding capacity right now, we're monetizing it. It's still quite early and represents an unusual opportunity for customers in AWS. I'll now turn to stores, where the team continues to deliver and innovate for customers across our key priorities: selection, low prices, and convenience, particularly fast delivery. We're offering 14% more selection since last quarter from popular brands like The North Face and Charlotte Tilbury, and we've added hundreds of thousands of items from popular brands this year. Everyday Essentials continues to grow quickly and year-to-date is growing nearly twice as fast as the rest of the business. We continue to make it easier for customers to order low-priced perishable groceries from Amazon, and customers in more than 1,000 cities and towns now can shop fresh groceries alongside millions of Amazon.com products with free same-day delivery. This is a game changer for customers who can now order milk alongside electronics, check out with one cart, and have everything delivered to their doorstep within hours. The team also invented a new add to delivery button that lets customers add items to previously scheduled orders and it's been used more than 80 million times since launch, and it's just launched. It's an example of one of those seemingly simple but powerful innovations that make customers' lives easier. We remain committed to staying sharp on price and meeting or beating prices of other major retailers. In July, we had our biggest Prime Day event ever, with customers saving billions of dollars across more than 35 categories. We continue to break records on speed. We're on track to deliver at our fastest speeds ever for Prime members globally once again this year, and we've started rolling out 3-hour delivery in select U.S. cities. We're also continuing to invest in infrastructure to speed up rural deliveries and serve more customers in more communities. That includes committing over $4 billion to expand our rural delivery network across the U.S. These are small towns where people want fast delivery, but where other companies have been backing out and reducing service. In contrast, we've already increased the number of rural communities with access to our same-day and next-day delivery by 60%, reaching roughly half of the total communities we plan to expand to by the end of the year. The stores team is also innovating rapidly with AI. For example, Rufus, our AI-powered shopping assistant has had 250 million active customers this year with monthly users up 140% year-over-year, interactions up 210% year-over-year and customers using Rufus during a shopping trip being 60% more likely to complete a purchase. Rufus is on track to deliver over $10 billion in incremental annualized sales. Here are the highlights: our generative AI-powered audio feature that combines product summaries and reviews to make shopping easier has expanded from hundreds of products at launch to millions of products and millions of customers have used it streaming almost 3 million minutes. In Amazon Lens, an AI-powered visual search tool that lets customers find products with their phone's camera, a screenshot, or a bar code, now includes Lens Live, which instantly scans products and shows real-time matches in a swipeable carousel. Tens of millions of customers are using Amazon Lens each month. Moving on to Amazon ads. We're pleased with the continued strong growth, generating $17.6 billion of revenue in the quarter and growing 22% year-over-year. We see strength across our broad portfolio of full photo advertising offerings that help advertisers reach an average ad-supported audience of more than $300 million in the U.S. alone. We also continue to be excited about our demand-side platform, Amazon DSP, which lets advertisers plan, activate, and measure full-funnel investments. Last quarter, I mentioned our partnership with Roku and we've built on that with a partnership with Netflix, providing advertisers using Amazon DSP with direct access to Netflix's premium ad inventory. We announced integrations with Spotify and SiriusXM. With Spotify, we provide advertisers with direct programmatic access to a global audience of more than 400 million monthly ad-supported listeners. And with SiriusXM, brands can reach 160 million monthly digital listeners across services like Pandora and SoundCloud and we're excited about the advertising opportunity around prime video live sports. Live sports got a lot of interest from advertisers in upfront negotiations for 2025, '26, and we exceeded our own expectations for upfront commitments with significant growth across the board. Finally, we're continuing to innovate for advertisers with AI. For example, in September, we announced an agentic AI tool and creative studio that plans and executes the entire creative process in a matter of hours instead of weeks. We're also inventing and seeing strong momentum in several other areas, and I'll mention just a few. In Prime Video live sports, NBA on Prime tipped off last week and our opening night doubleheader averaged 1.25 million viewers in the U.S., a double-digit increase over last season on cable. You'll see us bring the same constant innovation here that we brought to our NFL broadcast. We're adding golf with The Masters in 2026 and new skins competition with the PGA Tour on Black Friday this year. And we've added Peacock and FOX One to Prime Video's add-on subscription offering of over 100 channels in the U.S. We continue to be energized by the response to Alexa+ compared to what we call the classic Alexa experience. Alexa+ customers are talking to Alexa 2x more. Those interactions are much longer, and they're covering a broader range of topics. Using Alexa+ and Fire TV at 2.5x the rate of classic using natural conversation to discover audio content 4x more, engaging with photos 4x more, and customers are completing 4x more shopping conversations that end in a purchase. We've expanded the number of project hyper satellites and space to more than 150 and delivered over 1 gigabit per second speeds in tests with our enterprise-grade customer terminal, the first commercial phased array we know of to clear that threshold. Finally, Zoox robotaxis are available to riders in Las Vegas, and we've announced Washington, D.C. as the eighth testing location. We're excited for these to continue rolling out to more riders. Q4 is one of our busiest and most energizing times of the year, and we're excited about the continued demand for AWS. The innovations will announce in reinvent in December, the positive customer response to our AI-powered experiences, all the goods we'll be delivering throughout the holiday season, and a lot more. Thanks in advance to our teammates around the world who are gearing up to deliver for customers once again. With that, I'll turn it over to Brian for a financial update.

Thanks, Andy. Starting with our top line financial results. Worldwide revenue was $180.2 billion, a 12% increase year-over-year, excluding a 90 basis point favorable impact of foreign exchange. In Q3, we reported worldwide operating income of $17.4 billion. This operating income includes 2 special charges, which reduced operating income by $4.3 billion. The first charge of $2.5 billion is related to a legal settlement with the Federal Trade Commission, which impacts the North America segment and is recorded in the other operating expense line. The second charge of $1.8 billion relates to severance costs for role eliminations and impacts all 3 of our segments. The severance charge is recorded primarily in the technology and infrastructure, sales and marketing, and general and administrative expense line items. Excluding these 2 charges, worldwide operating income would have been $21.7 billion or $1.2 billion above the high end of our guidance range. Moving to our segment results. We remain encouraged by the innovation our teams are delivering for customers across all 3 segments. In the North America segment, third quarter revenue was $106.3 billion, an increase of 11% year-over-year. International segment revenue was $40.9 billion, an increase of 10% year-over-year, excluding the impact of foreign exchange. Worldwide paid units grew 11% year-over-year. We continue to prioritize the inputs that matter most to our customers. In the third quarter, our sharp pricing, broad selection, and fast delivery speeds continue to resonate with customers. Customers appreciate the ability to quickly receive items essential for their daily needs, including perishable groceries and have them delivered in the same day. Our millions of global third-party sellers continue to be important contributors to our vast selection, which helps customers find the items they need at competitive prices. We're committed to building innovative services and features for our sellers, including our ongoing advancements in generative AI. Today, more than 1.3 million sellers have used our generative AI capabilities to more quickly launch high-quality listings. Better listings translate into better traction with customers. And in Q3, worldwide third-party seller unit mix was 62%, up 200 basis points from Q3 of last year. Shifting to profitability. North America segment operating income was $4.8 billion, with an operating margin of 4.5%. Excluding the $2.5 billion charge related to the legal settlement with the FTC, North America segment operating income would have been $7.3 billion with an operating margin of 6.9%. North America segment operating margin also includes a portion of the severance charge. International segment operating income was $1.2 billion, with an operating margin of 2.9%. Excluding the impact of the severance charge, International segment operating margins expanded year-over-year. Globally, our progress on key inputs is delivering a better customer experience while driving a more efficient cost structure. For example, we're making notable strides in improving inventory placement to speed up delivery to customers. And as a result, for the third year in a row, we are on track to deliver our fastest speeds ever for Prime members in 2025. We continue to tune and improve our fulfillment operations and our regionalized network is operating at scale. We see many benefits of our inbound process improvements, including a reduction of U.S. inbound lead time by nearly 4 days compared to last year. This allows us to be more efficient with our inventory purchasing, which benefits working capital. We're also placing inventory more strategically throughout the network. And by leveraging our existing infrastructure, we're now offering U.S. customers the ability to order perishable groceries and receive them the same day and as little as 5 hours. We're seeing positive early results since launching in January; when customers start shopping groceries on Amazon, they are visiting the site more often and returning twice as often as non-perishable shoppers. Looking ahead, we see further opportunity to improve our activity in our global fulfillment and transportation network. We continue to improve inventory placement to drive down distance traveled and touches for packages. We will also build on the gains from our regionalized network through algorithmic improvements as well as launching robotics and automation. Operating margin may fluctuate quarter-to-quarter; we have a delivered approach to achieve sustained progress over the long term. Shifting to advertising, advertising revenue was $17.7 billion and growth accelerated for the third consecutive quarter. We continue to see strong growth on an increasingly large base, as our full funnel advertising approach of connecting brands with customers is resonating. Moving next to our AWS segment, revenue was $33 billion, up 20.2% year-over-year. This is an acceleration of 270 basis points compared to last quarter, driven by strong growth across both our AI and core services and more capacity, which has come online to support customer demand. AWS revenue increased $2.1 billion quarter-over-quarter and now has an annualized revenue run rate of $132 billion. AWS operating income was $11.4 billion, and reflects our continued growth, coupled with our focus on driving efficiencies across the business. We are expanding our data center footprint, largely to accommodate Gen AI. To the extent those assets were placed into service, related to depreciation does impact our margins. As we've long said, we expect AWS operating margins to fluctuate over time, driven in part by the level of investments we're making at any point in time. Now turning to our cash CapEx, which was $34.2 billion in Q3. We've now spent $89.9 billion so far this year. This primarily relates to AWS as we invest to support demand for our AI and core services and in custom silicon, like Trainium, as well as tech infrastructure to support our North America and international segments. We'll continue to make significant investments, especially in AI, as we believe it to be a massive opportunity with the potential for strong returns on invested capital over the long term. Additionally, we continue to invest in our fulfillment and transportation network to support the growth of the business, improve delivery speeds, and lower our cost to serve. These investments will support growth for many years to come. Looking ahead, we expect our full-year cash CapEx to be approximately $125 billion in 2025, and we expect that amount will increase in 2026. I'll finish up my remarks with net income. While we primarily focus our comments on operating income, our third-quarter net income of $21.2 billion includes a pretax gain of $9.5 billion related to our investment in Anthropic. This investment activity is not related to Amazon's ongoing operations and is included in non-operating income. We're encouraged by the start of the peak season and we are ready to serve customers in the coming months. I want to thank our teams across Amazon for their hard work as we get ready to delight customers during the holiday season. Our commitment to elevating the customer experience is the only reliable way to drive sustainable value for our shareholders. With that, let's move on to your questions.

And our first question comes from the line of Justin Post with Bank of America.

I'll ask on AWS. Can you just kind of go through how you're feeling about your capacity levels and how capacity constrained you are right now? And then in your prepared remarks, you mentioned Trainium3 demand and maybe broadening out your customer base. Can you talk about the demand you're seeing outside of your major customers for Trainium?

Yes. We have significantly increased our capacity, bringing in 3.8 gigawatts over the past year, with an additional gigawatt expected in the fourth quarter. We anticipate doubling our total capacity by the end of 2027. Currently, the industry faces potential bottlenecks with power, and possibly chips in the future, but we are effectively monetizing the capacity we have. Regarding Trainium demand, it's performing well, particularly Trainium2, which is fully subscribed and has become a multibillion-dollar business, experiencing a 150% increase in revenue quarter-over-quarter. Large projects like Project Rainier with Anthropic are utilizing Trainium2 to train the next version of their AI model, scaling from 500,000 to 1 million chips by the end of the year. While we have a limited number of substantial customers for Trainium2, its price performance, which is 30% to 40% better than alternatives, makes it attractive for customers focusing on AI and inference workloads. There is strong demand for Trainium, and we expect to preview Trainium3 at the end of this year, with more supply in early 2026. Many large and medium-sized customers have shown significant interest in Trainium3.

And the next question comes from the line of Brian Nowak with Morgan Stanley.

Congrats on the quarter, guys. So maybe 2. One, Andy, sort of a philosophical chip question. There's a lot of questions in the market about Trainium and sort of its positioning versus other third-party chips. So how do you think about the key hurdles of Trainium3 need to overcome to really make Trainium adoption broader to your point on the last question and continue to drive Trainium, as opposed to satisfying what could be broader demand with third-party chips in the near term?

Yes. Well, first of all, we're always going to have multiple chip options for our customers. It's been true in every major technology building block or component that we've had in AWS. Really in the history of AWS, it's never just one player that over a long period has the entire market segment and then can satisfy everybody's needs on every dimension. And so we have a very deep relationship with NVIDIA. We have for a very long time, and we will for as long as I can foresee the future. We buy a lot of NVIDIA. We are not constrained in any way in buying NVIDIA, and I expect that we'll continue to buy more NVIDIA both next year and in the future. But we're different from most technology companies in that we have our own very strong chip team, and this is our Annapurna team. And you saw it first on the CPU side with what we built with Graviton which is about 40% better price performance than the other x86 processors, and you're seeing it again on the custom silicon on the AI side with Trainium, which is about the same amount of price performance benefit for customers relative to other GPU options. And our customers to be able to use AI as expansively as they want. And remember, it's still relatively early days at this point. They're going to need better price performance and they care about it deeply. And so I mentioned earlier the momentum that Trainium2 has. And I think that for us, as we think about Trainium3, I expect Trainium3 will be about 40% better than Trainium2 and Trainium2 is already very advantaged on price performance. So we have to, of course, deliver the chip. We have to deliver it in volumes and deliver it quickly, and we have to continue to work on the software ecosystem, which gets better all the time. And as we have more proof points like we have with Project Rainier with what Anthropic is doing on Trainium2, it builds increasing credibility for Trainium. And I think customers are very bullish about it. I'm bullish about it as well.

And our next question comes from the line of Doug Anmuth with JPMorgan.

I'll stick with basically the same topic, Andy. But can you just talk a little bit about the architecture of Project Rainier and how it's differentiated and what that means for customers and for AWS? And do you expect Rainier to expand beyond Anthropic? And how do you replicate Rainier with Trainium3 chips?

Yes. I think what's compelling for Anthropic regarding Project Rainier is really the Trainium2 chip. We've built a very large cluster that they can use extensively. Constructing a cluster with over 500,000 chips, potentially reaching 1 million, is a significant infrastructure achievement that is challenging to replicate at scale. Part of this is due to the infrastructure capabilities we've developed over an extended period in AWS, which is unique in the industry. Additionally, the chip's performance and cost-effectiveness are important factors. While Project Rainier is tailored for Anthropic, we have many other customers interested in utilizing large clusters of Trainium chips, and we hope to provide them the opportunity with Trainium3.

The next question comes from the line of Mark Mahaney with Evercore ISI.

I would like to discuss two topics: groceries and future headcount considerations. Regarding groceries, last quarter you mentioned that around 70% of users had never purchased perishables from Amazon before. Can you elaborate on whether this presents a significant shift for you? You referred to it as a potential game changer earlier. Does this imply that we may not need Amazon Fresh stores anymore? You've always had an advantage with your delivery network. Have you reached a point where you can truly shift consumer habits and position Amazon as a primary choice for groceries? Do you believe you are at that stage now? On the second topic of headcount, given the recent news, could you share your perspective on how you see headcount evolving? Are the efficiencies gained from AI substantial enough to maintain a stable headcount for the near future? Please discuss the advantages and disadvantages in terms of headcount moving forward.

Yes, I'll begin with grocery. We have a substantial grocery business. Excluding Whole Foods Market and Fresh, our grocery business generated over $100 billion in gross merchandising sales in the last year, placing us among the top three grocers in the U.S. A significant portion of this includes items typically found in the middle aisle, such as consumables, canned goods, pet food, and health and beauty products, all of which are growing rapidly. Additionally, Whole Foods Market, a leader in organic foods, is also experiencing growth at a pace exceeding most grocery companies, along with promising profitability. We plan to increase our Whole Foods locations in the coming years. I am also excited about our new concept, Daily Shop, which offers a smaller version of Whole Foods in urban areas. We have launched three of these locations, which have begun successfully, and you can expect to see more. We've consistently aimed to enhance our physical presence, and we continue to explore various formats. The initiative we are most enthusiastic about is our capability to provide perishable groceries with same-day delivery. Many of our customers shop multiple times a week, purchasing items like shampoo, detergent, or water. The ability for them to add perishables like milk, eggs, and yogurt to their order, all from the same cart, and have it delivered within a few hours is very appealing. About a year ago, we initiated this in a few markets and were pleasantly surprised by the quick uptake, not just in the number of customers buying perishables, but also in how frequently they returned for future grocery purchases. We have now expanded this service to 1,000 cities across the U.S., with plans to reach 2,300 by the end of this year, which is significantly altering the trajectory and scale of our grocery business. I believe the traditional model of weekly grocery stock-ups is evolving, and we are playing a key role in that change. While we will continue to experiment with other physical formats, our advancements in perishables, especially through our same-day delivery capabilities, are highly significant. Regarding headcount, the recent announcement we made was not primarily about financial or AI concerns. It is more about our culture. Rapid growth over the years has led to increased staff, locations, and business types, resulting in more layers within the organization. This can unintentionally diminish the ownership among our employees who handle the day-to-day operations and make quick decisions. As a leadership team, we are dedicated to functioning like the world's largest startup, which involves streamlining operations, enhancing employee ownership, and fostering innovation and agility. With the current technological transformation, being lean and responsive is crucial, and that is our focus moving forward.

And the next question comes from the line of Eric Sheridan with Goldman Sachs.

Wanted to know, Andy, if you could reflect on the opportunity that's continuing to present itself in terms of rolling out more robotics and automation and the broader theme of physical AI across your operations? And how should we be thinking about that as a driver of potential efficiencies, but also as a driver of the ability to possibly reinvest back in the business over the long term?

Robotics is a very substantial area of investment for us. We have over 1 million robots in our fulfillment network at this point. I would say that while that's significant, we have a lot of invention in flight. So I expect that we'll have more over a period of time. Robotics are very important for us and for our customers and for our teammates because they improve safety, they boost productivity, they increase speed, and they let our human teammates focus on problem solving and what they do best. We expect that our people remain at the heart and center of our fulfillment network as they have from when we first started working with robotics. We expect that over time, we will have a fulfillment network where robots and humans complement each other and work together. You're going to continue to see us advance and invest very significantly in robotics. It's going to help on the safety, the productivity, the speed, and ultimately some of the cost pieces, which will allow us to continue to improve the customer experience.

And the next question comes from the line of John Blackledge with TD Cowen.

How does Amazon think about agentic commerce going forward? And how do you think Amazon will serve customers using agents to purchase goods on Amazon in the future?

I'm very excited about the long-term potential of agentic commerce. It has the potential to benefit customers and significantly enhance e-commerce. If you know what you want to buy, there's not much better than shopping on Amazon. However, if you're unsure about your purchase, a physical store and a salesperson still offer some advantages. Many people use Amazon successfully, but it's often helpful to ask questions for guidance on what to look for. As you ask more questions and have various options presented, I believe AI and agentic commerce will improve the online experience, making it easier to narrow down choices compared to traditional retail settings. We are actively working on our own agentic commerce initiatives, including Rufus, which is improving and expanding in usage. We also offer features like Buy for Me, where we can find items on Amazon that we don't carry but can purchase from other merchants for customers. Both initiatives have been successful. Over time, we also plan to collaborate with third-party agents. This reminds me of the early days of search engines, which became invaluable for commerce discovery. Currently, search engines contribute only a small portion of our referral traffic, and third-party agents represent an even smaller fraction, but we are committed to forming partnerships that enhance the customer experience. Right now, the customer experience lacks personalization, shopping history, accurate delivery estimates, and correct pricing. We need to improve these aspects and ensure proper value exchange. The exciting part is that AI and agentic commerce solutions will increase online shopping, which is beneficial for customers and for Amazon as it will allow us to offer the widest selection, great value, and reliable fast delivery. This bodes well for our future.

And our final question comes from the line of Colin Sebastian with Baird.

I guess first on AWS, following up there. How much of this acceleration is driven by core infrastructure versus AI workload monetization? And I think part of it is trying to understand how important newer services like AgentCore are becoming and bringing enterprises to AWS to build agents? And then I guess, secondly, regarding the acceleration in advertising, if you could potentially disaggregate the core advertising contribution versus DSP and Prime video. That would be helpful as well.

I'll start with AWS. We are very pleased with this quarter's results, showing a 20% year-over-year growth on an annualized run rate of $132 billion, which is impressive. There is clear momentum. We are experiencing growth in our AI segment, particularly in inference, training, and the use of our Trainium custom silicon. Bedrock and SageMaker are expanding rapidly, and many companies are now focusing on building agents. I believe that much of the future value in AI for these companies will come from agents. However, developing agents remains challenging, which is why we created strands, an open-source tool that allows users to build agents from any model they envision. Customers who prioritize security and scalability are beginning to adopt agents but have lacked the foundational components necessary for secure and scalable agents that can support their businesses and enhance customer experiences and data management. This is why we developed AgentCore, which offers essential building blocks similar to what we provided in the early days of AWS with compute, storage, and databases. AgentCore offers the components needed to deploy agents securely and efficiently, and we have found that this resonates strongly with our customers. There is nothing else like it, and it is altering their timelines and willingness to create agents, which is very compelling for them. We are also seeing growth in AWS from enterprises transitioning from on-premises infrastructure to the cloud, and we continue to capture a significant share of those transformations. Given our current momentum, I believe we can maintain this growth rate for some time. On the advertising front, we are also very satisfied with our progress. Every one of our advertising services showed meaningful growth this quarter. Several factors contribute to this. We offer a comprehensive advertising solution that spans from widespread awareness initiatives at the top of the funnel to targeted strategies at the point of sale with sponsored products. Few companies can match the robustness of our full funnel approach. Additionally, our capabilities in audience curation and measurement provide a return on advertising spend that is quite distinct. There are several areas where we see ongoing growth. In our stores business, a large portion of retail—80% to 85%—still occurs in physical locations. Over time, that will change, and I believe AI will accelerate this transition. We have substantial opportunities in our existing stores and with video advertising, which has already yielded significant revenue, although we are still in the early stages. This segment is likely to continue being a major growth area. Our demand-side platform, Amazon DSP, is also growing rapidly. We have addressed customer feedback over the past 20 months and closed key gaps, making our DSP fully featured. Our partnership with Roku provides the largest connected TV presence in the U.S. Furthermore, we have added integration opportunities with ad inventory from Netflix, Spotify, and SiriusXM for our DSP customers. This combination is powerful, and our demand-side platform is expanding quickly, giving us a positive outlook on our progress while noting that we still have work to do. However, we are far from reaching our growth potential there.

Thanks for joining us on the call today and for your questions. A replay will be available on our Investor Relations website for at least 3 months. We appreciate your interest in Amazon and look forward to speaking with you again next quarter.