NEW YORK (AP) – Amazon on Thursday reported stronger-than-expected revenue and profits for the first quarter, sending its stocks higher in after-hours trading. But its prices took a dip in the evening amid concerns about a continued slowdown in the company’s profitable cloud computing unit AWS.
Seattle-based Amazon said it pulled in USD127.4 billion in revenue for the January-March quarter, a nine-per-cent growth compared to the USD116.4 billion it reported during the same period last year. Analysts surveyed by FactSet had expected USD124.6 billion.
Profits came out to USD3.2 billion, or 31 cents per share, higher than the USD2.24 billion industry analysts had expected.
It’s also a strong improvement from the same period last year, when the e-commerce giant reported its first quarterly loss in years mainly driven by a loss in value of its investment in the electric vehicle company Rivian Automotive.
Amazon’s stock rose as much as 10 per cent in after-hours trading as investors initially welcomed the news, but later dipped two per cent after company executives expressed during a call with investors lingering challenges with AWS.
The report on Thursday rounds out a busy earnings week for major tech companies.
On Wednesday, Facebook parent Meta beat profit and revenue expectations, leading to a bounce in its stocks in after-hours trading. Microsoft posted a spike in profits on Tuesday driven by a strong showing in its cloud segment Azure, which recently saw some slowdowns in growth. Google reported its cloud business grew by a strong 28 per cent, leading to its first operating profit. But it grew at a slower pace compared to the same period last year.
Amazon CEO Andy Jassy wrote in his annual shareholder’s letter released earlier this month that AWS, the leader in the cloud market, was facing short-term headwinds as companies become more cautious in their spending amid more uncertainty in the economy.
The company said Thursday the segment grew 16 per cent during the first quarter, which beat analyst expectations but had a much slower showing than a 37 per cent growth rate a year prior.
Amazon reported no growth in the first quarter in its online retail business. The unit grew by three per cent excluding foreign exchange rates, according to Amazon’s calculations.
Company executives have said shoppers have become more conscious about their spending and are trying to save costs when they can. On top of that, many shoppers have let go of their pandemic-fuelled reliance on e-commerce, which led Amazon to report record revenue figures at the time.
During a call with reporters on Thursday, Amazon Chief Financial Officer Brian Olsavsky said consumers continue to be cautious with their spending amid high inflation and are looking to stretch their budgets further by purchasing lower-priced items.
But he said the company continues to see bright spots in international sales helped by easing economic pressures in Europe, as well as its advertising businesses and other areas.
