Amazon's stock price rises by 7%, nearing a record high following an earnings report that exceeded expectations.

• Amazon shares rallied on Friday following better-than-expected third-quarter results.
• The company's cloud and advertising units drove growth.
• The stock is trading near a record.

On Friday, shares of the company experienced a 7% increase and came close to reaching an all-time high following the release of better-than-anticipated earnings. This growth was fueled by the company's cloud computing and advertising divisions.

The stock reached a high of $200 on Friday, which was its highest close for the year. It has increased by approximately 32% throughout the year.

In the quarter, revenue grew by 11% to $158.9 billion, surpassing the $157.2 billion forecast of analysts surveyed by LSEG. Additionally, earnings came in at $1.43, exceeding the average analyst estimate of $1.14.

The Amazon Web Services cloud business experienced a 19% increase in sales to $27.4 billion, although this was slightly below analysts' expectations. This represents an acceleration from the previous year's growth rate of 12%, but still lags behind the growth rates of competitors such as Microsoft and IBM, where cloud revenue increased by 33% and 35%, respectively. Microsoft's Azure revenue includes other cloud services.

The capital expenditures of Amazon increased by 81% year over year to $22.62 billion, as the company continues to invest in data centers and equipment such as processors to power its AI products. Amazon has already launched several AI products in its cloud and e-commerce businesses, and it is also expected to announce a new version of its Alexa voice assistant powered by generative AI.

Analysts at Roth MKM wrote in a note after the earnings report that Amazon has integrated AI into its diverse tech footprint, which includes multi-billion revenue streams in e-commerce, advertising, subscriptions, online video, and cloud. They have a buy rating on the stock.

Amazon's CFO, Brian Olsavsky, stated on the earnings call that the majority of the company's 2024 capital expenditures will be used to support the increasing demand for technology infrastructure.

In 2024, the company plans to spend approximately $75 billion on capital expenditures, and CEO Andy Jassy believes the company will spend even more the following year.

"Jassy stated on the call that the significant bumps observed are primarily due to generative AI. He emphasized that this is an exceptional, once-in-a-lifetime opportunity. Jassy added that shareholders will be pleased with the long-term prospects of the company's aggressive pursuit of this opportunity."

Sales in the unit grew 19% to $14.3 billion during the quarter, exceeding expectations and surpassing the growth rate of Amazon's core retail business.

Amazon's ad growth was comparable to the 18.7% increase seen in another company, while Google's ad revenue growth was slower at 15%. Additionally, Amazon's sales increased by 15% from the previous year.

According to LSEG, Amazon's revenue forecast for the current quarter is between $181.5 billion and $188.5 billion, representing growth of 7% to 11% year over year. However, the midpoint of that range, $185 billion, was below the average analyst estimate of $186.2 billion.

— CNBC's Ari Levy contributed to this report.

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