Amazon.com forecast quarterly revenue largely below Wall Street estimates on Thursday, hurt by a weaker retail business as strong demand for its cloud services as businesses continue to spend relentlessly on artificial intelligence.

The massive cloud demand is helping the tech company ease the pressure from weaker growth at its e-commerce business, which is gearing up for the holiday season amid weakness in consumer confidence stemming from global trade uncertainty.

The company’s shares surged more than 10% in extended trading.
Its cloud unit, Amazon Web Services, reported a 20% rise in revenue in the third quarter ending in September, compared with the estimates of a 17.95% increase.

Amazon projected net sales of between $206 billion and $213.0 billion for the fourth quarter, while analysts on average were expecting revenue of $208.12 billion, according to data compiled by LSEG.

The strong results from AWS, the world’s largest cloud provider, followed stellar cloud revenue growth reported on Wednesday by Microsoft’s Azure and Google Cloud, the No. 2 and No. 3 players in the industry, respectively.

Microsoft, Google-parent Alphabet and Facebook owner Meta all announced plans for higher annual capital expenditures as they pour money into chips and data centers.

AWS typically accounts for a little more than 15% of Amazon’s total revenue, but the segment is a huge profit engine, making up roughly 60% of the company’s total operating income. The unit reported revenue growth of 17.5% in the second quarter.