Strong AWS Growth Powers Amazon Results
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Amazon, the latest of the "magnificent seven" tech giants to report quarterly earnings, has exceeded Wall Street expectations, driven by strong growth in its cloud computing business, reports The Guardian.
Shares in the e-commerce giant rose in after-hours trading following the announcement of revenue of $158.9 billion, exceeding analysts' forecasts of $157.2 billion. Earnings per share also came in above expectations at $1.43, compared to the $1.16 anticipated by Bloomberg analysts.
Amazon's cloud computing division, Amazon Web Services (AWS), reported revenue of $27.5 billion for the quarter, a 19% increase, aligning with analysts' predictions. This growth rate surpasses last year's figures, signaling a positive trend for investors. The company's advertising business also performed in line with expectations.
These results come on the heels of strong cloud performance from Microsoft and Google, although investor sentiment towards Microsoft was dampened by the company's inability to fully satisfy expectations.
"Investors need to see the monetization of AI spreading to the rest of the tech landscape," said Dan Ives, a Wedbush analyst, this week. "The next few weeks will be the linchpin to confirmation that the AI 'use case phase' have now begun within the enterprise world."
Amazon executives have previously stated that AWS had an annualized revenue run rate exceeding $105 billion in the second quarter of 2024.
Investors are also scrutinizing Amazon's traditional online retail business for signs of continued consumer demand in a robust US economic environment.
"Amazon is experiencing strong growth throughout 2024, with momentum for both its core retail business and its efforts to diversify its portfolio," said Greg Zakowicz, senior e-commerce expert at Omnisend, to the Guardian.
"The cost of living crisis has eased for some consumers this year, freeing up disposable income and allowing Amazon to get more cut-through with shopping events like Prime Day or Black Friday than they did last year," Zakowicz added.
Investors are also closely watching Amazon's Project Kuiper, a space-based internet service that aims to provide global broadband access through a network of 3,236 satellites in low Earth orbit.