Amazon’s profits soared once again in the first quarter of 2024, the company announced Tuesday, the latest in a series of strong earnings reports for the retail giant. The company attributed the boost to artificial intelligence and advertising sales.
Amazon reported total revenue of $143.3 billion in the first three months of the year, up 13% from the same period in 2023 and beating Wall Street expectations of $142.65 billion. The e-commerce giant reported a more than 200% increase to $15 billion, with net revenue more than tripling to $10.4 billion from $3.17 billion at the same time in 2023.
In a statement accompanying the report, CEO Andy Jassy said Amazon’s continued focus on AI has “reaccelerated.”[ed]” the growth rate of Amazon Web Services (AWS), the company’s cloud computing sector. AWS revenue increased 17% year over year to $25 billion, with AWS accounting for 62% of total operating profits. In a call after the report, Jassy said Amazon still has a lot of room to grow in the generative AI sector.
The push into AWS comes after the sector’s growth slowed recently. Executives attributed the decline to the recovery from the Covid-19 pandemic, which had pushed many companies to upgrade cloud infrastructure to support remote work. That trend is stabilizing, they said, and demand for AI may further boost their cloud services.
“We remain very bullish on AWS,” Jassy said. “We’re at $100 billion in annualized revenue right now, and this is before we even factor in generative AI. “We have a great opportunity in front of us.”
Meanwhile, advertising sales rose 24% year over year to $11.8 billion, after the company expanded its advertising, including launching ads on Prime Video, starting in at the beginning of this year.
As Amazon improves its cloud computing and artificial intelligence capabilities, it will need to spend more on infrastructure to support the technology, Jassy said on the investor call Tuesday. Capital expenditure (capex) was $14 billion during the quarter and Jassy said it is expected to increase in subsequent quarters of the fiscal year.
“The more demand AWS has, the more we have to purchase power and hardware for new data centers,” he said, adding that the company doesn’t spend capital “without very clear signs that we can monetize it.” Last week, Meta shares plunged on news that the company would increase its capital spending to develop its artificial intelligence capabilities.
The earnings report comes after Amazon announced it. would invest $11 billion to build more data centers in Indiana, promising at least 1,000 jobs there. Also in the quarter, the company extended its partnership with chipmaker Nvidia to continue boosting its AI offerings.
The report highlights a positive investor response to Amazon’s recent cost-cutting measures, including the layoff of more than 27,000 employees from the end of 2022. Amazon laid off hundreds of additional employees in early 2024.
Shares rose 5% in after-hours trading.