E-commerce giant Amazon announced Tuesday that its profits tripled in the first three months of 2024, with its cloud computing, advertising and retail businesses booming.
Amazon's stock price rose about 1 percent in after-hours trading following the earnings report, as Wall Street stock exchanges closely watched the impact of artificial intelligence, in addition to the costs associated with it.
"It's been a good start to the year across all parts of the business," Amazon CEO Andy Jassy said in an earnings release.
The Seattle-based company reported a profit of $10.4 billion on total revenue of $143.3 billion, compared with a profit of $3.2 billion on total revenue of $127.4 billion in the same period last year. .
"Amazon kicks off its new fiscal year with a strong set of numbers that show it has largely shrugged off the pressures in the consumer economy," said GlobalData managing director Neil Saunders in a note to investors.
Amazon's e-stores posted a seven percent increase in sales for the quarter, despite significant pressure from rivals such as Shein and Timo, Saunders said.
"Our customer data continues to show that Amazon is a destination for consumers looking for value and convenience," Saunders said.
He added, "We also believe that Prime subscribers are increasingly turning to Amazon to get the most value from their subscriptions."
The growth in online store sales indicates that the transformation of Amazon's e-commerce business over the past year continues, according to Blake Drosh, principal analyst at Emarketer.
Drosh said, "While the core e-commerce business is no longer the biggest driver of growth, it remains an essential component" for Amazon, especially in driving its advertising business.
Jassy said the appeal of artificial intelligence capabilities is driving companies to modernize their infrastructure by turning to Amazon's cloud computing division (AWS), which is on track to bring in $100 billion for the giant group over the course of a year.
"We've seen a lot of momentum on the AI front," Jassy said on an earnings call, noting that "companies are pursuing this relatively accessible goal of modernizing their infrastructure."
Earnings figures showed that AWS revenue in the recently ended quarter was $25 billion, up from $21.4 billion in the same period last year.
Jassy also pointed to Amazon's burgeoning advertising business, which is gaining momentum in its online store and Amazon Prime streaming TV service.
Amazon reported that advertising generated $11.8 billion, up 24% from the same quarter last year.
Jassy noted that the technology giant is also working to cut costs, which led to the elimination of about 27,000 jobs last year.
Amazon's shares have risen nearly 75% in the past 12 months as investors praised the company's significant cost cuts, sales growth and the potential of its cloud computing platform in the coming age of artificial intelligence.
The company, founded by Jeff Bezos, is also testing an artificial intelligence chatbot called Rufus, which can offer shopping advice to mobile app customers in the United States.
Meanwhile, generative AI capabilities are helping sellers create product listings.
The company plans to invest billions of dollars in AWS data centers in Mexico, Saudi Arabia, and the United States in the coming years, according to the earnings report.
Amazon CFO Brian Olsavsky said on the earnings call that Amazon's capital expenditures are expected to increase significantly this year, driven by investments in AWS and artificial intelligence.
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