Amazon (AMZN) reported first-quarter results that beat Wall Street estimates for both revenue and profit, sending shares of the retail giant up about 2% in pre-market trading Wednesday. .
Buoyed by strong performance in its cloud computing segment, Amazon continued a wave of Big Tech results that mostly wowed Wall Street, even as investors look toward the conclusion of the Fed’s May policy meeting on Wednesday.
Net sales rose 13% from the same period last year to $143.3 billion, Amazon reported late Tuesday, beating analysts’ expectations of $142.6 billion, data shows Bloomberg. This pace was driven by a 16% increase in revenue from Amazon Web Services (AWS), which Amazon says is on track to generate $100 billion annually.
The company reported adjusted earnings per share of $0.98, compared to consensus estimates of $0.83.
Like its competitors Microsoft and Alphabet, Amazon is wielding its influence in its cloud computing business to gain an advantage in the burgeoning AI market. AI tools require enormous amounts of data and processing power to train and run large language models and their applications, relying on cloud providers to provide vital infrastructure.
Amazon Chief Financial Officer Brian Olsavsky said on a call with reporters following the report that overall capital spending is expected to increase “significantly” this year, from nearly $50 billion. dollars in 2023, due to rising infrastructure costs to support AWS’s growth.
Amazon is seeing strong demand on the AWS side, with customers signing longer contracts with larger commitments, many of which include generative AI components, he said.
Advertising also contributed significantly to first-quarter revenue growth. The company met analysts’ expectations of $11.8 billion, up 24% from the same period last year.
Although Amazon has dazzled with its business growth, its outlook has pointed to some signs of a potential decline in consumer spending.
“What we’re seeing is sort of a continuation of what we’ve been saying in previous quarters. Customers in the U.S. are very conscious about their spending. They’re looking for deals. They’re trading down,” said Olsavsky. “And this trend appears to continue in the second quarter.”
Amazon expects second-quarter net sales to be between $144 billion and $149 billion, slightly below analyst estimates of $150.2 billion, according to Bloomberg data.
Amazon’s report came a week after cloud rival and AI competitor Microsoft (MSFT) posted an impressive quarter, beating expectations thanks to the strength of its cloud computing business. The market applauded even louder the results of Google parent company Alphabet (GOOG, GOOGL), which outperformed in terms of revenue and net income and were accompanied by the announcement of a new dividend , the latest in a trend among tech giants.
Amazon, which has positioned itself as a leader in AI, is another player in the race to capture market share and launch new consumer services. In March, Amazon increased its investment in AI startup Anthropic, injecting an additional $2.75 billion to bring its total investment to $4 billion.
Amazon’s stock, which joined the Dow Jones Industrial Average (^DJI) in February, is up about 20% for the year.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.
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