Seattle-based e-commerce giant Amazon has announced a significant profit surge for the first three months of 2024, thanks to robust performances across its cloud computing, advertising, and retail divisions.
The company’s shares experienced a one percent increase in after-market trading following the release of its earnings figures, with investors closely monitoring the impact of artificial intelligence (AI) initiatives and associated costs.
Amazon’s profit for the quarter totalled $10.4 billion, marking a threefold increase compared to the same period a year earlier. This substantial growth was accompanied by a surge in revenue, which reached $143.3 billion, up from $127.4 billion in the corresponding period of the previous year.
As GlobalData managing director Neil Saunders highlighted, Amazon’s strong financial results underscore its resilience in navigating challenges within the consumer economy.
Despite competitive pressures from rivals like Shein and Temu, sales at Amazon’s online stores increased by seven percent in the quarter. This growth trajectory reflects Amazon’s enduring appeal among consumers seeking value and convenience, particularly among Prime members who leverage their subscriptions for maximum benefit.
Emarketer senior analyst Blake Droesch emphasized the continued turnaround in Amazon’s e-commerce business, citing the sector’s essential role in driving the company’s advertising business forward.
Jassy highlighted the growing demand for AI capabilities, noting that companies are increasingly modernizing their infrastructures with the support of Amazon Web Services (AWS), the company’s cloud computing division. AWS revenue for the quarter reached $25 billion, a significant increase from $21.4 billion in the same period last year.
Amazon’s burgeoning advertising business also contributed to its strong financial performance. Ad sales reached $11.8 billion, reflecting a 24 percent increase year-on-year. The company’s aggressive cost-cutting measures, including job eliminations, have further bolstered its bottom line.
Investor confidence in Amazon has remained high, with the company’s shares surging by nearly 75 percent over the past 12 months. This growth trajectory reflects optimism surrounding Amazon’s cost-cutting initiatives, sales growth, and the potential of its cloud computing platform, particularly in the context of the burgeoning AI era.
In addition to its financial performance, Amazon continues to innovate in AI, with initiatives such as the Rufus chatbot, which provides shopping tips to US mobile app customers, and generative AI features to assist sellers in creating product listings.
Amazon plans to invest billions of dollars in expanding its AWS datacenters in Mexico, Saudi Arabia, and the US in the coming years. CFO Brian Olsavsky noted that capital expenditures are expected to ‘meaningfully increase’ this year, driven by investments in AWS and AI.
