Amazon.com reported strong quarterly results driven by interest in artificial intelligence, with CEO Andy Jassy emphasizing the big opportunity in servicing AI customers. The company’s shares climbed slightly in after-hours trading, despite a current-quarter revenue forecast that fell below expectations. Chief Financial Officer Brian Olsavsky noted that capital spending would increase throughout the year to support AWS infrastructure and generative AI efforts. Amazon is investing upfront in AI offerings to meet customer demand and compete with rivals like Alphabet and Microsoft-backed OpenAI.
The first-quarter sales for Amazon increased 13% to $143.3 billion, while net income tripled to $10.4 billion. The company expects revenue of $144.0 billion to $149.0 billion for the current quarter, which falls short of analyst consensus expectations. D.A. Davidson analyst Gil Luria highlighted the positive trend of enterprise customers moving more workflows to the cloud again, benefiting not only Amazon but also software companies selling to enterprise customers. AWS, the largest provider of cloud-computing services, posted a 17% rise in revenue to $25.0 billion, outperforming expectations.
AI has been a major focus in Silicon Valley, with Amazon rolling out its “Q” chatbot for businesses and Rufus service to help customers find new products. Jassy mentioned that AWS is on track to achieve $100 billion in annual sales. Despite rivals like Alphabet and Meta Platforms announcing dividends, Amazon did not follow suit. The company’s shares have performed well in 2024, climbing about 15%, although it remains one of the few tech stocks in the Magnificent Seven that do not offer dividends. The company’s net income of $10.4 billion, or 98 cents per diluted share, beat analysts’ average EPS estimate of 83 cents.
Amazon’s advertising business also contributed to its strong quarterly results, with $11.8 billion in ad sales, up 24% from a year earlier. The addition of unskippable ads to the Prime Video streaming service has drawn interest from marketers, with customers having the option to opt out for a fee. Despite reducing jobs last year, Amazon still ended the first quarter with 1.52 million employees, higher than a year earlier by 56,000. The company continues to adjust its workforce across various units to align with its business priorities and growth areas.
