Amazon disclosed a rise in its quarterly profits on Thursday; however, the company fell short of revenue estimates, causing a decline in stocks during after-hours trading. The Seattle-based tech giant reported a profit of $13.5 billion for the April-June period, surpassing the $10.99 billion forecasted by analysts. This marked a considerable increase from the $6.7 billion in earnings during the same period last year. Earnings per share for the second quarter stood at $1.26, exceeding analysts’ expectations of $1.03. The company’s overall revenue was $148 billion, reflecting a 10% growth but slightly missing analyst predictions of $148.67 billion. Amazon foresees revenue for the current quarter, ending on Sept. 30, to fall between $154.0 billion and $158.5 billion, lower than the anticipated $158.22 billion.
Like many other tech firms, Amazon escalated its expenditures during the pandemic to cater to soaring consumer demand in online shopping. Subsequently, with softened demand and broader economic challenges affecting various sectors of its business, Amazon took aggressive cost-cutting measures by axing unprofitable ventures and laying off over 27,000 corporate employees. While this cost reduction contributed to increased profits, Amazon has also reaped rewards from the rise in interest in advanced artificial intelligence, invigorating its cloud computing division, Amazon Web Services. The company reported a 19% surge in Amazon Web Services revenue compared to the same period last year.
Amazon CEO Andy Jassy noted, “We’re continuing to make progress on a number of dimensions, but perhaps none more so than the continued reacceleration in AWS growth.” The cloud computing entity, primarily serving businesses, has been striving to attract more customers by introducing new features such as Amazon Bedrock, offering companies access to AI models for their applications. Despite Jassy’s earlier projection of AWS hitting $100 billion in annual revenue, Amazon is expected to escalate its spending this year to bolster the division. The company unveiled plans to invest billions in additional infrastructure in Saudi Arabia, Mexico, and Mississippi to establish two data centers, leveraging state incentives.
Conversely, revenue from Amazon’s core e-commerce segment increased by 5%, while its advertising business witnessed a 20% surge in sales, mainly fueled by ad listings on its online platform. Amazon’s financial performance comes in the wake of earnings reports from other tech giants like Microsoft, Meta, and Alphabet Inc., Google’s parent company.
