Amazon’s cloud and ad revenue grow as shoppers remain cautious

Online retail titan Amazon said on Thursday that its cloud and advertising units helped it beat earnings expectations in the first quarter of this year, despite more spending-conscious shoppers and businesses.

“For the first time in several quarters, Amazon may finally have some wind behind it,” said Insider Intelligence lead analyst Andrew Lipsman.

Shares of Amazon rose more than 10% shortly after the release of earnings data, only to dip slightly below the day’s closing price as it warned customers were staying careful with their budgets.

Amazon reported a profit of $3.2 billion on revenues that rose 9% to $127.4 billion in the quarter.

Net income was approximately $1 billion higher than analysts had anticipated.

“There’s a lot to like about how our teams are delivering for customers, particularly in an uncertain economy,” said Amazon Chief Executive Officer Andy Jassy.

“Our Stores business continues to improve the cost of service in our fulfillment network while increasing the speed at which we get products into the hands of customers.”

Jassy in March unveiled a plan to cut an additional 9,000 jobs from the online retail giant’s workforce, following 18,000 cut in January.

The layoffs represent a smaller percentage of Amazon’s total workforce, which reached 1.5 million people in December 2022, than cuts seen at other tech giants.

Jassy told workers the extra layoffs were needed as the company looks to downsize after years of hiring, particularly during the coronavirus pandemic, as people have turned to the internet to shop.

Amazon said the number of packages handled by a “Robin” robotic system used in its operations in North America and Europe eclipsed one billion during the quarter.

Robin uses computer vision and AI to help workers sort and manage packages shipped to Amazon customers, according to the company.

– Clouds rising –

Amazon’s AWS cloud computing unit saw revenue jump 16% to $21.4 billion, but costs weighed on operating income, which totaled $5.1 billion from $6.5 billion dollars for the same quarter a year earlier, according to the earnings report.

“Amazon’s better-than-expected performance for its core advertising and AWS profit centers suggests that the enterprise and digital advertising sectors may be turning a corner,” said analyst Lipsman.

AWS is prioritizing long-term customer relationships as it “navigates companies that spend more cautiously in this macro environment,” said Jassy.

Microsoft’s results for the first three months of the year also pleased investors this week, encouraged by its industry-leading enterprise cloud products.

The company founded by Bill Gates has reported that revenue from cloud and AI offerings has more than made up for dips in money from licensing Windows software to computer makers as sales suffer.

Meanwhile, Google’s parent company Alphabet this week reported that its cloud computing business turned a profit for the first time since it began reporting separate figures for that unit.

“I am pleased with the ongoing momentum in the cloud,” Alphabet chief executive Sundar Pichai said in an earnings call.

Alphabet beat market expectations in the first quarter of 2023, a sign that the search engine giant is making a comeback.

The Internet titan became the focus of concern when the Microsoft-backed ChatGPT was released and quickly went viral late last year.

The Windows maker has added the technology to its Bing search engine and office software.

The search giant has since rushed out Bard, its version of language-based AI, but the release has been deemed clunky and has so far disappointed observers and company insiders, according to media reports. .


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