Amazon’s quarterly report has highlighted the strengths of the tech giant, which is now focusing heavily on Artificial Intelligence.
Amazon in the spotlight after the presentation of the quarterly accounts.
The tech giant reported better-than-expected earnings and revenue for the first quarter, driven by growth in advertising and cloud computing. The stock recorded an increase in extended trading.
Interest in Artificial Intelligence has helped spur the growth of cloud computing.
CEO Andy Jassy told analysts that “there is a great opportunity ahead of us” in serving customers regarding AI. Amazon is racing to keep up with rivals in offering generative artificial intelligence software. Competitors include Alphabet and Microsoft.
Shares of the Seattle-based e-commerce and technology company are up about 2% in premarket trading after its current quarter revenue forecast fell short of expectations. In the regular session, the stock closed 3.3% lower. What did the Amazon quarterly reveal about the present and near future of the tech giant?
Amazon quarterly in numbers: everything you need to know
Amazon’s operating profit rose more than 200% in the period to $15.3 billion, far outpacing revenue growth, the latest sign that cost-cutting measures and the company’s focus on efficiency are strengthening its profits.
AWS accounted for 62% of total operating profit. Net income also more than tripled to $10.4 billion, or 98 cents per share, compared to $3.17 billion, or 31 cents per share, a year ago.
Sales rose 13% from $127.4 billion a year earlier.
Amazon expects a continued increase in profitability for the second quarter but at a more measured pace. The company said operating profit will be between $10 billion and $14 billion, up from $7.7 billion a year earlier. According to LSEG data, the company expects revenues of $144.0 billion to $149.0 billion for the current quarter ending in June, compared to analysts’ consensus expectations of $150.07 billion.
AWS sales rose 17% in the first quarter to $25 billion, beating Wall Street forecasts for 12% sales growth to $24.5 billion. Over the past year, AWS growth has slowed as companies have reduced cloud spending. Amazon executives have indicated that demand for generative AI could be a boon to its cloud business, despite seeing cost optimizations decline.
Amazon’s earnings growth was driven in part by widespread cost cutting, changes to its fulfillment operations, and stabilization of cloud spending. CEO Andy Jassy has imposed greater discipline in the company’s spending.
The company has laid off more than 27,000 employees since the end of 2022, with cuts continuing through 2024. During the first quarter, Amazon laid off hundreds of employees across its healthcare and AWS businesses.
The future of Amazon and AI
Artificial intelligence has been a fixation in Silicon Valley since OpenAI’s ChatGPT debuted in late 2022, fueling billions in funding and a mad rush to stuff chatbots and other artificially intelligent features into more products.
On Tuesday, Amazon said its "Q" chatbot for business was available to the public, and earlier this year it launched the Rufus service to help customers on its website find new products.
Jassy also said in a statement that AWS is now on track to reach $100 billion in annual sales. As Amazon increases its cloud computing and artificial intelligence capabilities, it will have to spend more on infrastructure to support the technology, he added. Capital expenditure (capex) totaled $14 billion for the quarter, and Jassy highlighted that it is expected to increase in subsequent quarters of the fiscal year.
“The greater the demand for AWS, the more we need to procure power and hardware for new data centers,” he said, adding that the company doesn’t spend capital without very clear signals that it can then be monetized. Last week, Meta shares plummeted on news that the company would increase capital spending to develop its artificial intelligence capabilities.
Amazon has gone against the trend of Big Tech companies that have announced a dividend, such as Alphabet and Meta Platforms. The latest two announcements were cheered by investors, pushing stock prices higher.
Amazon and Tesla, however, remain the only members of the so-called Magnificent Seven technology stocks that do not offer dividends.
Original article published on Money.it Italy 2024-05-01 11:33:46. Original title: Amazon triplica l’utile e punta sull’IA. Tutti i numeri del colosso
