NEW YORK (AP) — Amazon on Tuesday reported strong first-quarter results, driven by growth in its cloud computing division and new ad spending from its Prime video streaming service.
The Seattle-based e-commerce giant announced sales of $143.31 billion in the first three months of the year, a 13% increase from the same period last year. Net income was $10.43 billion, or 98 cents per share. That was well above Wall Street analysts' expectations of 84 cents a share, according to FactSet.
“This year has gotten off to a good start across our business, as you can see in both our improved customer experience and our financial results,” Amazon CEO Andy Jassy said in a statement.
The country's largest online retailer had better-than-expected results during the holiday season, with consumer spending buoyed by discounts and faster shipping. Amazon held another discount event in late March, just before the end of the first quarter.
Overall, U.S. consumer spending continues to grow despite rising prices and borrowing costs caused by the Federal Reserve's interest rate hikes. The country's economy It's late For the first three months of this year, But employment is also remaining strong.
Amazon's U.S. customers are “very cautious” about their spending, Chief Financial Officer Brian Olsabsky said on a call with reporters. He said the company was seeing lower spending in Europe “particularly” as consumers cut deals in search of bargains.
Apart from its core retail business, Amazon announced that its cloud computing division, Amazon Web Services, had first-quarter sales of $25.04 billion, an increase of 17% from the same period last year.
AWS, whose customers are mostly businesses, is a linchpin of Amazon's strategy in the artificial intelligence race among big tech companies. The division saw growth slow last year as companies cut costs amid economic concerns. But Amazon is using its AI services to buck that trend and attract more companies to its cloud business.
Jassy said AI capabilities have once again accelerated AWS's growth rate and it is now on pace to reach $100 billion in annual revenue.
Hours before Amazon released its earnings report on Tuesday, the company announced the full rollout of a business chatbot called Q that is said to help employees be more productive at work. Last month, the company completed a $4 billion investment in the San Francisco-based company. AI startup AnthropicOpenAI rival Anthropic, which is partnering with Microsoft, is working with Amazon to develop so-called foundational models that form the basis of AI technology.
Revenue from the company's online advertising business also jumped 24%, with much of that coming from sponsored product ads, Olsavsky said.
He said Amazon, which began running ads on Prime Video in late January, currently has “low numbers” of ads on its streaming service compared to TV and other streaming providers. Olsavsky said the ads are doing well because customers can avoid them by paying an additional $2.99 per month, adding that they are attracting “many new advertisers who aren't currently using Amazon's advertising services. “It's attracting people,” he said.
Amazon.com shares rose about 2 percent in after-hours trading.
Under Jassy, Amazon has cut costs across different parts of its business to stay profitable. This year, the company has eliminated hundreds of positions across AWS, Prime Video and MGM Studios. Its subsidiaries, popular social media platform Twitch and audiobook service Audible, also laid off employees.
Additionally, Amazon faces regulatory hurdles. The company announced in January canceled the transaction Acquires robot vacuum cleaner maker iRobot after facing regulatory hurdles in Europe. was also sued A lawsuit was filed by the Federal Trade Commission citing antitrust concerns.
Amazon said it expects second-quarter net sales to be between $144 billion and $149 billion. Analysts expected $150.2 billion, according to FactSet.
