Amazon Celebrates Cloud Computing Surge, Apple Expects Return to Growth

Apple expects a major sales surge during the holiday season after launching new iPhones, while Amazon's cloud computing unit just recorded its strongest growth in nearly three years. Both tech giants are showing renewed strength despite global economic headwinds and fierce competition in key markets like China.

Apple Bounces Back With Double-Digit Growth Forecast

Apple's CFO Lavan Parekh told analysts Thursday that first-quarter revenue through December will grow between 10% and 12%. That's nearly double what analysts expected - they were only predicting 6% growth on average.

The company thinks iPhone revenue will hit double-digit growth year-over-year. Parekh said this could be Apple's best quarter ever. For a company that's been struggling with sluggish sales in China and delays in AI features, this forecast signals a strong comeback.

Apple's stock jumped 1.87% after the announcement and is up 8.4% for the year. In the fourth quarter ending September 27, sales rose 7.9% to $102.5 billion, beating the expected $102.2 billion.

The company made up for China's economic slowdown with better-than-expected growth in services. Mac computers and wearable devices also performed better than analysts thought they would.

China Remains a Tough Market

But China is still a problem. Revenue there dropped 3.6% to $14.5 billion, way below the $16.4 billion analysts expected. This keeps investors worried about Apple losing ground in what used to be a major growth market.

Local Chinese phone makers are getting more competitive. Huawei took the top spot in June with its push to win back premium phone customers. Beijing-based Xiaomi also scored big with its Xiaomi 17 series, pushing other competitors to speed up their product launches.

Still, CEO Tim Cook thinks Apple will return to growth in China this quarter. He said foot traffic at Apple stores increased noticeably there, and the newest iPhone generation is getting good reception from customers.

iPhone revenue grew 6.1% to $49 billion in the fourth quarter, though that was slightly below the $49.3 billion analysts expected. The iPhone 17 and iPhone 17 Pro got off to a quick start in September, and China sales grew 29% year-over-year in the first two weeks of October.

Amazon's Cloud Business Soars

Amazon Web Services posted $33 billion in third-quarter revenue, up 20% from last year. That's the biggest annual increase since late 2022, calming investors who worried the cloud leader was falling behind competitors.

Analysts expected 18% growth on average, so Amazon beat expectations here too. The stock jumped about 13% in after-hours trading after closing at $222.86 in New York.

CEO Andy Jassy opened the analyst call by highlighting AWS prospects and sharing new numbers about AI's impact on Amazon's business. The company estimates Rufus, its shopping chatbot built into retail apps, will help generate $10 billion in additional annual sales.

Amazon's Connect call center product is on track for $1 billion in annual revenue. And Bedrock, the AWS platform that lets companies use AI models, could eventually become as big as EC2, the computing service that's one of the cloud unit's main money makers.

"We have momentum, you can see that," Jassy said during the call.

Strong Holiday Season Expected

Amazon's total sales rose 13% to $180.2 billion in the quarter ending September 30, beating the expected $177.8 billion. The company expects fourth-quarter revenue between $206 billion and $213 billion, matching analyst forecasts.

Online store sales grew 10% to $67.4 billion. The advertising unit jumped 24% to $17.7 billion. Services for third-party sellers using Amazon's platform rose 12% to $42.5 billion.

Both companies are heading into the crucial holiday shopping season with renewed confidence. Apple's betting on strong iPhone demand, while Amazon's cloud business is finally showing the acceleration investors have been waiting for. The real test will be whether they can maintain this momentum as economic uncertainty continues and competition keeps heating up.