Amazon has returned to its normal form in 2023, reporting better-than-expected results in the first quarter of 2024. After struggling to meet expectations in 2022, the e-commerce giant reported net income of $10.4 billion on net sales of $143.3 billion for the three months ended March 31.
“We're off to a strong start this year across our businesses, and that's evident in both our improved customer experience and our financial performance,” said CEO Andy Jassy, noting that Amazon's core e-commerce business has achieved record shipping speeds for Prime members and reduced costs to serve them. “We're still in the early stages on all of our businesses, and we remain excited about how much we can make our customers' lives better and easier,” he added, answering the question of how much room the company has left to grow.
Perhaps the most important message is that AWS's growth slowdown, which spooked investors last year, has subsided, with growth reaccelerating for the second straight quarter. “AWS' growth rate is reaccelerating as enterprises renew their infrastructure modernization efforts, combined with the appeal of AWS' AI capabilities,” Jassy said, also revealing that the company's largest profit source is now reaching a $100 billion annual revenue rate.
As the chart below shows, AWS is Amazon's third-largest business segment by revenue, but investors tend to look particularly closely at its performance because it's by far the most profitable part of the company's vast business. The chart also shows that the world's most popular online retailer has expanded its operations significantly over the past few years. The company's core “Online Stores” business — first-party e-commerce sales recognized on a total revenue basis — accounted for 64% of sales in the first quarter of 2017 but will represent just 38% of Amazon's total sales for the first three months of 2024.
