Amazon reports strong Q1 profit, cloud unit sales rise
Amazon reported strong increases in profit and net sales in the first quarter of its fiscal year; This was helped by increased growth at the leading cloud computing unit.
The e-commerce and technology company said sales in its cloud computing unit increased 28 percent in the January-March period, the fastest increase in the last 15 quarters.
Amazon Web Services achieved 24 percent sales growth in the fourth quarter; This followed the division’s 20 percent growth in the third quarter.
Net sales increased 17% year over year to $181.5 billion, driven by growth in the North American and international segments.
The Seattle-based company also delivered a bullish outlook for net sales in the current quarter, beating analysts’ estimates. However, shares lost nearly two percent in post-closing trading.
Investors were closely watching Amazon’s quarterly earnings to see whether the company’s $200 billion investment in artificial intelligence, robots, semiconductors and satellites was paying off.
The planned spending for this year marked a 60 percent increase over Amazon’s $128 billion in capital spending last year, spooking investors and sending the stock down 11 percent in after-hours trading when it was announced in February.
CEO Andy Jassy defended the spending in the previous quarterly earnings call and said Amazon expects long-term returns on invested capital.
Last quarter’s results underlined that demand for Amazon’s services and technology continues to grow.
“We’re in the midst of some of the biggest changes of our lifetimes, we’re well positioned to lead, and I’m very optimistic about what’s ahead for our customers and Amazon,” Jassy said in a statement Wednesday.
The big deals Amazon signed with OpenAI, Anthropic, and Meta this month have given the company solid momentum.
Amazon announced what it called a “major expansion” of its partnership with ChatGPT maker OpenAI on Tuesday, a day after the AI company said it was loosening ties with longtime backer Microsoft.
Last week, Anthropic agreed to pour more than $100 billion into Amazon’s AWS cloud platform over the next 10 years to train and run the AI company’s Claude chatbot. Amazon said the partnership will allow Anthropic to secure up to five gigawatts of Amazon’s Trainium chips to train and power AI models.
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