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Amazon continues its streak of impressive earnings reports, revealing soaring profits for the first quarter of 2024, bolstered by strong performances in artificial intelligence (AI) and advertising sales.
The e-commerce behemoth reported a remarkable overall revenue of $143.3 billion in the first three months of the year, marking a 13% increase from the same period in 2023 and surpassing Wall Street’s expectations of $142.65 billion. Notably, the company’s net income more than tripled to $10.4 billion, soaring from $3.17 billion in the corresponding period of 2023.
Amazon’s Chief Executive, Andy Jassy, attributes this remarkable performance to the company’s unwavering focus on AI, which has spurred the growth rate of Amazon Web Services (AWS), its cloud-computing division. AWS revenue witnessed a robust 17% year-over-year increase, reaching $25 billion, and accounted for an impressive 62% of total operating profit. Jassy underscores the significant growth potential in the generative AI sector, indicating ample room for expansion in this domain.
The surge in AWS revenue comes after a recent slowdown in the sector, attributed to the post-pandemic recovery phase, where companies invested heavily in cloud infrastructure to facilitate remote work. However, executives note that this trend is stabilizing, with increasing demand for AI expected to further bolster AWS’s cloud services.
Advertising sales also experienced substantial growth, rising by 24% year-over-year to $11.8 billion, following Amazon’s expansion of advertising initiatives, including the introduction of ads on Prime Video earlier this year.
As Amazon ramps up its investments in cloud-computing and AI capabilities, Jassy acknowledges the necessity of increased infrastructure spending to support these technologies. Capital expenditure (capex) for the quarter reached $14 billion, with expectations of further increments in subsequent quarters of the fiscal year. Jassy emphasizes that capital expenditure is strategically aligned with clear signals indicating monetization opportunities.
The earnings report coincides with Amazon’s announcement of a significant investment of $11 billion to construct additional data centers in Indiana, promising at least 1,000 new jobs. Additionally, the company extends its partnership with chip manufacturer Nvidia to enhance its AI offerings.
Investors have responded positively to Amazon’s recent cost-cutting measures, including substantial layoffs totaling more than 27,000 employees since late 2022, with hundreds more laid off in early 2024. These strategic initiatives underscore Amazon’s commitment to efficiency and profitability amidst its continued expansion and technological advancements.
