Adverse numbers for Amazon due to higher costs

Lagging demand for cloud services and costs of Alexa devices a drag on results

Trade

Shares of Seattle-based Amazon fell more than 6% Thursday due to disappointing second-quarter revenue figures. Expectations for the third quarter were also tepid, pointing to declining demand for its cloud services, one of the e-commerce giant’s main pillars.

Revenue rose 10% from last year’s second quarter to $148 billion from $134.38 billion last year. North America accounted for $90 billion in sales and international markets for 31.7 billion.

Net profit rose 65% year-on-year to $13.5 billion from $6.75 billion in last year’s quarter. Amazon posted operating income of $14.7 billion, up from $7.7 billion in the same period of 2023.

Cloud subsidiary AWS saw revenue increase 19% to $26.3 billion. CEO Andy Jassy points to AWS’ “continued acceleration in growth,” but Amazon is struggling with higher costs.

Amazon Web Services (AWS) announced it will discontinue a large number of cloud services, including Cloud9, CodeCommit and CloudSearch. AWS is no longer taking new customers for these services. AWS will support customers in migrating to other AWS or third party solutions.

For the third quarter, Amazon is counting on revenue of $154.0 billion to $158.5 billion, or 8-11% on a quarterly basis.

The Wall Street Journal recently reported that the part that makes Alexa devices, such as the Echo Show and Echo Dot, suffered $25 billion in losses between 2017 and 2021. Amazon would like to change that with AI. In doing so, users will have to pay for advanced features. A subscription should cost between $5 and $10.

Amazon Prime Video, its competitor to Netflix, signed an exclusive media rights deal with the National Basketball Association for 11 years. It covers the games of the 2025-26 NBA season, both season games and playoff games. The games will be offered in the US via Amazon Prime.

Read More: Amazon Results