Amazon continues its impressive streak of earnings reports, revealing elevated profits for the first quarter of 2024, supported by strong performance in artificial intelligence and ad sales.
The e-commerce giant reported a remarkable total revenue of $143.3 billion in the first three months of the year, representing a 13% increase from the same period in 2023 and exceeding Wall Street expectations of $142.65 billion. Notably, the company's net income more than tripled to $10.4 billion, up from $3.17 billion in the corresponding period of 2023.
Amazon CEO Andy Jassy attributes this impressive performance to the company's consistent focus on artificial intelligence, which has spurred the growth rate of Amazon Web Services (AWS), its cloud computing division. AWS revenue saw a solid 17% year-over-year increase, reaching $25 billion, and representing a staggering 62% of total operating profit. Jassy emphasizes the significant growth potential in the generative AI sector, indicating that there is plenty of scope for expansion in this area.
The increase in AWS revenue comes after the recent slowdown in the sector, which was attributed to the post-pandemic recovery phase, as companies invested heavily in cloud infrastructure to facilitate remote work. However, executives point out that this trend is stabilizing, with demand for artificial intelligence expected to enhance AWS's cloud services.
Ad sales also saw significant growth, rising 24% year over year to $11.8 billion, after Amazon expanded advertising initiatives, including serving ads on Prime Video earlier this year.
As Amazon increases its investments in cloud computing and AI capabilities, Jassy acknowledges the need to increase infrastructure spending to support these technologies. Capital expenditures (capex) for the quarter were $14 billion, with further increases expected in subsequent quarters of the fiscal year. Jassy emphasizes that capital spending is strategically aligned with clear signals of income generation opportunities.
The earnings report coincides with Amazon's announcement of a major $11 billion investment to build additional data centers in Indiana, promising at least 1,000 new jobs. Additionally, the company is expanding its partnership with chip manufacturer Nvidia to enhance its AI offerings.
Investors have responded positively to Amazon's recent cost-cutting measures, including significant 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 amid its continued expansion and technological advancements. . .