Amazon reported Thursday its profit in
the recently ended quarter doubled to 13.5 billion dollars with the help of renewed
momentum of its AWS cloud computing business.
The e-commerce giant’s sales of 148 billion dollars fell just shy of lofty market
expectations, however, and shares slid more than four percent to $176.50 in
after-market trades.
“We’re continuing to make progress on a number of dimensions, but perhaps
none more so than the continued reacceleration in AWS growth,” said Amazon
chief executive Andy Jassy.
Revenue at the AWS cloud computing unit grew to 26.3 billion dollars compared with
22.1 billion dollars in the same period a year earlier, according to earnings figures.
The 12.7 billion dollars taken in from ads on the platform was also shy of
expectations, with the market predicting 13 billion dollars.
Retail, ads and cloud computing are considered Amazon’s financial pillars.
“While Amazon has multiple levers it can pull, the outlook is becoming
tighter,” said GlobalData managing director Neil Saunders.
“Amazon will remain very profitable but the pace at which it can add to the
bottom line appears to be waning.”
Amazon — like other tech giants investing in AI — is also spending more
money, a factor investors are watching keenly.
Microsoft saw its shares slip this week on earnings figures showing its
crucial cloud computing unit did not grow as strongly as expected.
Shares of Google parent Alphabet dropped on concerns that ad revenue was
slowing while costs were on the rise after its earnings release.
“Meta stands out from other tech firms that have AI ambitions because it
already brings in a massive amount of revenue from digital advertising,” said
Sonata Insights founder and chief analyst Debra Aho Williamson.
“Unlike Google, which is grappling with making changes that will impact its
core ad business, most of Meta’s AI investments are either aimed at making
advertising on its properties work better, or at building new features that
could eventually become revenue drivers.”
New cloud boss
The head of Amazon’s AWS cloud computing business, Adam Selipsky, who was
helping lead the company’s expansion into AI, unexpectedly left the company in
June.
In a memo to staff, Selipsky said he was leaving with “mixed emotions,” but
“given the state of the business and the leadership team, now is an
appropriate moment for me to make this transition.”
Amazon sales and marketing executive Matt Garman took over as head of AWS.
Amazon Web Services (AWS) is a key subsidiary of the tech giant,
capitalizing on the growing appetite among businesses for remote computer and
artificial intelligence services.
AWS had 31 percent of the cloud computing market at the end of 2023,
according to Stocklytics.
But rivals Microsoft and Google are gaining ground with their cloud
businesses.
The race has become particularly heated since the deployment of
ChatGPT-style artificial intelligence that the cloud companies are offering to
clients who want to buy into the AI revolution.
But AWS is less known to the public and Amazon does not have flagship AI
brands such as ChatGPT or Google’s Gemini that are being deployed across those
firms’ lines of products.(AFP)
