Amazon (NASDAQ: AMZN) has become the latest American giant to ride the artificial intelligence (AI) wave to hit new revenue levels. The e-commerce giant recorded over $140 billion in first-quarter revenue, hitting its largest quarterly operating profit.
In the first three months, Amazon’s revenue was $143.3 billion, surpassing Wall Street estimates of $142.65 billion. The retail giant’s revenue shot up 13% year-over-year while operating income surged 200% to $15.3 billion. Net income saw the highest increase, tripling from $3.17 billion to $10.4 billion.
CEO Andy Jassy attributed the company’s revenue achievements to its focus on AI, which he says has reaccelerated the growth of Amazon Web Services (AWS), the company’s cloud computing division.
AWS recorded $25 billion in revenue, surging 17% year-over-year, its fastest quarterly rise since 2022. It accounted for 62% of the retailer’s operating profits, with Jassy stating that it was on course for its biggest year yet.
“We remain very bullish in AWS. We’re at a $100bn-dollar annualized revenue run right now, and this is before you even calculate generative AI. There’s a very large opportunity in front of us,” he said.
Amazon is betting big on AI, both as an infrastructure provider with AWS and an AI services firm, Jassy added. Already, tens of thousands of its clients rely on Bedrock, its cloud-based AI service, and the CEO projects that many more will sign up as the cost of integrating the technology continues to lower. Some leading AI companies also rely on AWS, including the $18.4 billion Anthropic, in which Amazon has invested $4 billion, its largest venture investment.
“We’re seeing strong demand signals from our customers on the AWS side. They’re signing longer deals with larger commitments, many with generative AI components,” commented CFO Brian Olsavsky.
Currently, most clients use AWS to train their large language models. However, Jassy stated that in the long term, the biggest opportunity for AWS will be a rise in the demand for its cloud to anchor its clients’ AI applications.
Amazon’s AI dominance will not come cheap. The company splashed $48 billion last year to boost its cloud and AI capacities, and it projects that this number will “meaningfully increase” this year. In the first quarter, the company’s capital expenditure hit $14 billion, and according to CFO Olsavsky, that will be the lowest quarterly spend this year.
Amazon’s projections align with most of its AI sector peers, whose expenditures are expected to be significantly higher this year. In its earnings call a week ago, Meta (NASDAQ: META) revised its projected annual spending upwards to $40 billion to “continue to accelerate our infrastructure investments to support our artificial intelligence (AI) road map.”
The announcement wasn’t well received on Wall Street, with the company’s stock losing over $200 billion, its second-largest one-day dip ever.
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Source: https://coingeek.com/amazon-records-largest-quarterly-operating-profit-boosted-by-ai/