Amazon.com reported better than expected quarterly results driven by growth in cloud computing and artificial intelligence. CEO Andy Jassy highlighted the opportunity in servicing AI customers, with capital spending expected to increase throughout the year to support AWS infrastructure and generative AI efforts. The company’s first-quarter sales increased 13% to $143.3 billion, with net income more than tripling to $10.4 billion. The current-quarter revenue forecast came in slightly below expectations, leading to a modest increase in share price in extended trade.
Amazon is investing upfront to build out its AI offerings to meet customer demand, particularly as customers seek out longer-term contracts. The company is racing to keep pace with competitors such as Alphabet and Microsoft-backed OpenAI in offering generative AI software. AWS, the largest provider of cloud-computing services, posted a 17% rise in revenue to $25.0 billion in the first quarter. The company expects revenue of $144.0 billion to $149.0 billion for the current quarter ending June, slightly below analyst consensus expectations.
AI has been a key focus in Silicon Valley, with Amazon rolling out its “Q” chatbot for businesses and the Rufus service to help customers find new products on its website. AWS is on track to achieve $100 billion in annual sales, with the company’s push to build its advertising business also contributing to positive results in the quarter. Amazon’s ad sales increased by 24% to $11.8 billion, with the introduction of unskippable ads on its Prime Video streaming service driving excitement among marketers.
Amazon’s net income of $10.4 billion beat analysts’ expectations, with earnings per share of 98 cents exceeding the average estimate of 83 cents. The company’s stock has climbed about 15% in 2024, outperforming the S&P 500’s gain of around 6%. Despite not offering a dividend like some of its Big Tech rivals, Amazon’s focus on continuous innovation and expanding its AI and cloud offerings has helped to drive growth and maintain investor confidence.
While competitors like Microsoft and Alphabet saw higher growth rates in cloud-computing revenue for the first quarter, Amazon’s strategic investments in AI and infrastructure are positioning the company well for future growth. Despite challenges in trimming jobs and managing workforce fluctuations, Amazon remains focused on meeting customer demand and driving innovation across its various business units. The company’s emphasis on leveraging AI and cloud technology to enhance customer experience and drive revenue growth will be key to its continued success in the dynamic tech industry landscape.
