by NEW YORK (AP) — Amazon reported a continued slowdown in its AWS cloud computing unit on Thursday, but higher-than-expected revenue and profit for the first quarter sent its stock surging in after-hours trading.
The Seattle-based company said it made $127.4 billion in revenue in the January-March quarter, up 9 percent from $116.4 billion it posted in the same period last year. Analysts polled by FactSet were expecting $124.6 billion.
Profits were $3.2 billion, or 31 cents a share, higher than the $2.24 billion expected by industry analysts. It’s also a sharp improvement over the same time last year, when the e-commerce giant reported its first quarterly loss in years primarily due to a loss in value on its investment in electric vehicle company Rivian Automotive.
Shares of Amazon rose 9% in after-hours trading.
Thursday’s report wraps up a busy earnings week for major tech companies. Facebook parent Meta beat earnings and revenue expectations on Wednesday, leading to a rebound in its shares in after-hours trading. Microsoft posted a spike in profit on Tuesday, driven by strong performance in its Azure cloud segment, which has recently seen some slowdowns in growth. Google reported that its cloud business grew a strong 28%, leading to its first operating profit. But it’s been growing at a slower pace than the same time last year.
Amazon CEO Andy Jassy wrote in his annual letter to shareholders released earlier this month that cloud market leader AWS was facing near-term headwinds as companies are becoming more cautious in their spending amid greater uncertainty in the economy. The company said Thursday that the segment grew 16% during the first quarter, beating analysts’ expectations, but at a much slower growth rate than a 37% growth rate a year earlier.
Company executives also said shoppers have become more conscious of their spending and are looking to save costs when they can. Additionally, many shoppers shed their pandemic-fueled ecommerce addiction, which led Amazon to report record revenue figures at the time.
Amazon saw no first-quarter growth in its online retail business. It grew 3% excluding exchange rates.
Amazon also cut its spending amid slowing online sales and concerns that the US will enter a recession.
The company began cutting expenses last year by canceling some of its warehouse expansion plans and reducing headcount at its facilities due to attrition. It accelerated cost-cutting measures over the past two quarters by cutting 27,000 business roles across several units, including devices, advertising, AWS, and Twitch, the popular live streaming platform it acquired in 2014. It also fired several companies that weren’t bringing enough money, such as its healthcare startup Amazon Care, subsidiary fabric.com, and video-calling device Amazon Glow. On Wednesday, the company said it would shut down its health-focused Halo devices and related subscription service on August 1.
In February, the retailer said it would close some of its Amazon Fresh and Go convenience stores and pause expansions in an effort to find the right formula for its grocery business. Amazon also suspended construction on the second phase of its Northern Virginia headquarters. It plans to bring thousands of people into the first phase of the development when it opens in June and has asked for $152.7 million in state incentives to bring those jobs to Virginia.
Jassy signaled confidence that the company can keep costs in check. He also said Amazon will continue to expand its investments in a number of areas that are further away from its core business, such as health care, generative AI and Kuiper, a satellite broadband project that the company unveiled. in 2020.
