Amazon.com surpassed its fourth-quarter revenue expectations aided by new generative artificial intelligence capabilities in its cloud and online retail operations, propelling robust expansion during the crucial Christmas period.

Amazon shares rose as much as eight percent in trading after the market close after investors cheered the results.

Amazon's high-spending business customers have provided it with stability in an uncertain economy, but its position as the world's biggest cloud provider is being challenged by rival Microsoft.

AWS CEO Andy Jassy says “Continued long-term focus on customers and feature delivery, citing efforts to incorporate generative AI into many of its services. The new features are starting to be reflected in our overall results.”

Generative AI revenue was still small, and it is anticipating the tech to generate tens of billions of dollars in the coming years, virtually every consumer business that Amazon operated already had or would have generative AI offerings.

The fourth quarter revenue of Amazon Web Services was in line with analysts’ expectations.

In response to Microsoft's promised $10 billion investment in ChatGPT parent OpenAI, Amazon is spending up to $4 billion on chatbot-maker Anthropic.

Amazon expects its capital expenses this year to increase to support growth of AWS including additional investments in generative AI and large language models, Chief Financial Officer Brian Olsavsky says.

According to Visible Alpha, Amazon Web Services operating margin surged to nearly 30 percent in the fourth quarter, just shy of gains in the third quarter.

Microsoft's Intelligent Cloud business, which houses its Azure service, had a margin of 48.2 percent in the December quarter and the margin was 9.4 percent.

“All eyes will be on AWS, where the mild acceleration of growth leaves some lingering doubts about whether the cloud unit will be able to hold its own against rivals,” Sky Canaves.