NEW YORK (AP) — Amazon reported strong first-quarter results Tuesday, driven by growth at its cloud computing unit and new advertising dollars from its Prime Video streaming service.
The Seattle-based e-commerce giant said it generated $143.31 billion in revenue during the first three months of this year, up 13% from the same period last year. Net income was $10.43 billion, or 98 cents per share. That far exceeded Wall Street analysts’ expectations of 84 cents per share, according to FactSet.
“It’s been a strong start to the year across the company, and it shows in both our improved customer experience and our financial results,” said Amazon CEO Andy Jassy , in a press release.
The nation’s largest online retailer reported better-than-expected results for the holiday shopping period, when it reported strong consumer spending supported by discounts and faster shipping speeds. Amazon held another discount event in late March, just before the end of the first quarter.
Overall, U.S. consumer spending continued to grow despite rising prices and borrowing costs resulting from the Federal Reserve’s interest rate hikes. The country’s economy slowed in the first three months of this year, but hiring also remained robust.
Amazon’s U.S. customers are “very thoughtful” about their spending, Chief Financial Officer Brian Olsavsky said on a call with reporters. He noted that consumers are looking for deals and downselling, and that the company is “especially” seeing lower spending in Europe.
Besides its core retail business, Amazon said first-quarter sales of its cloud computing unit, Amazon Web Services, were $25.04 billion, up 17% from last year. same period last year.
AWS, whose customers are primarily businesses, has been a cornerstone of Amazon’s strategy in the race for artificial intelligence among big tech companies. The unit saw a slowdown in growth last year as companies cut costs amid concerns about the economy. However, Amazon has used its AI offerings to counter this trend and attract more businesses to its cloud business.
Jassy said AI capabilities have re-accelerated AWS’s growth rate and it is now on track to generate $100 billion in annual revenue.
Hours before Amazon released its earnings report on Tuesday, the company announced the full rollout of an enterprise chatbot called Q that it says can help employees be more productive at work. Last month, it completed its $4 billion investment in San Francisco-based AI startup Anthropic, an OpenAI competitor allied with Microsoft. Anthropic is working with Amazon to develop what are called core models that underpin AI technologies.
Sales in the company’s online advertising business also climbed 24%, the majority of which is driven by advertising for sponsored products, Olsavsky said.
He said Amazon, which began running ads on Prime Video in late January, currently has a “light” number of ads on the streaming service compared to TV or other streaming providers. Olsavsky said the ads, which customers can avoid for an additional $2.99 monthly fee, are performing well and “attracting a number of new advertisers who are not currently using Amazon’s advertising services.”
Shares of Amazon.com Inc. were up about 2% in after-hours trading.
Under Jassy, Amazon has cut costs in different parts of its business to remain profitable. This year, the company cut hundreds of positions at AWS, Prime Video and MGM Studios. Its subsidiaries, popular social media platform Twitch and audiobook service Audible, have also laid off staff.
Additionally, Amazon also faces regulatory hurdles. In January, the company canceled a deal to buy the iRobot robot vacuum cleaner after facing regulatory hurdles in Europe. It was also sued by the Federal Trade Commission on antitrust grounds.
Amazon says it expects net revenue of between $144 billion and $149 billion in the second quarter. Analysts expect $150.2 billion, according to FactSet.
