Online retailing and cloud giant Amazon reported that it earned a net income of $6.7 billion on revenues of $134.4 billion in the previous quarter, with revenues jumping 11 percent year-over-year (YOY).
“It was another strong quarter of progress for Amazon,” Amazon CEO Andy Jassy said. “We continued lowering our cost to serve in our fulfillment network, while also providing Prime customers with the fastest delivery speeds we’ve ever recorded. Our AWS growth stabilized as customers started shifting from cost optimization to new workload deployment, and AWS has continued to add to its meaningful leadership position in the cloud with a slew of generative AI releases … We’re also continuing to see strong demand for our advertising services as the team keeps innovating for brands, including the ramp up for Thursday Night Football with the ability for advertisers to tailor their spots by audience and create interactive experiences for consumers. We remain excited about what lies ahead for customers and the company.”
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Wall Street is excited again, too: AWS, advertising, and overall revenues all beat projections, sending Amazon’s stock price up 10 percent in extended trading.
Generally speaking, Amazon doesn’t provide a lot of meaningful data about its various businesses each quarter, preferring instead to cherry-pick from key milestones. But it’s interesting to me that it discussed stabilizing AWS, which means that growth has slowed dramatically in what has emerged in one of Amazon’s biggest businesses. But it also supplied a lot of AWS data points in its press release.
First, the hard numbers: AWS earned $22.1 billion in revenues in the quarter, up 10.85 percent from the $19.7 billion it earned in the year-ago quarter. That’s the slowest growth since 2015. And it’s a far cry from the 26 percent growth that Microsoft saw this past quarter with Azure, but AWS is a more mature and successful business, and Azure growth has been plummeting over the past year too. Plus, AWS revenues beat expectations, and AWS represents over 70 percent of Amazon’s overall operating profits.
With regard to the potential for future AWS growth, Amazon not surprisingly touted all of the AI-based capabilities that are now being used by multiple large-scale customers.
“Amazon announced new AWS technologies and capabilities that help customers of all sizes take advantage of generative AI, improve productivity, and enhance their security posture,” the firm noted, citing Amazon Bedrock, Cohere, AWS HealthScribe, Amazon Elastic Compute Cloud P5 instances, AWS Fabric, Amazon Security Lake, and several others. “[And we announced] the AWS Generative AI Innovation Center to help customers successfully build and deploy generative AI solutions. AWS is investing $100 million in the program, which will connect AWS AI and machine learning experts with customers around the globe to help them envision, design, and launch new generative AI products, services, and processes.”
In other words, the future of AWS is the same as the future of Azure, meaning AI, which makes sense because Amazon, like Microsoft, is uniquely positioned to benefit from this new and next era of growth.