Cloud, AI drive successful quarter for Amazon
Amazon is the latest tech giant to announce last quarter’s numbers, and like its competitors Google, Microsoft and Nvidia, Amazon is benefiting from the boom in artificial intelligence (AI).
The Magnificent Seven major US tech companies have been trying to stay ahead of each other in the AI race. After previously Microsoft went completely all in on AI, Amazon, too, has acknowledged that this is where the most profit can be made.
Amazon exceeded analysts’ expectation for the quater, making a total profit of $143.3 billion (€134 billion). The profit is mainly due to the successful sale of cloud solutions, storage space on the Internet. The subdivision Amazon Web Services (AWS) reported sales of $25 billion, a growth of 17%. This figure was also above expectations.
Amazon chief financial officer Brian Olsavsky explained: “We are seeing strong demand from our customers on the AWS side. They are signing longer deals with larger commitments, many with generative AI components.”
Generative AI now gives Amazon “billions in revenue,” Olsavsky said. It’s the first time the company has stuck a number on profits from artificial intelligence, even if he didn’t give an actual dollar amount.
The increasing demand is noteworthy; just last year there was a downturn and fewer paying customers for AWS.
Amazon is streamlining plans for the rest of the year.
The company plans to continue investing in Amazon Web Services, allocating more than $150 billion over the next few years. That money should go mainly to high-end computing chips, so that the cloud network can meet the growing demand for support in increasingly sophisticated AI technology.
However, investments are also being made in concrete AI applications, such as chatbot Anthropic and shopping assistant Rufus.
Amazon’s best-known line of business, e-commerce, brought in a slightly underwhelming $54.6 billion in sales. According to Olsavsky, consumers have become more frugal. Food is selling more than other products, which has reduced margins for Amazon.
Amazon CEO Andy Jassy (pictured) shifted the focus to profitability last year and cut 35,000 jobs at department stores. That delivered a boost at the time.
So once again, the tech giant appears to be shifting its focus somewhat from retail to technology. Amazon’s advertising arm is also doing well. Last year it started showing ads on streaming platform Amazon Prime, good for a profit of €11.8 billion, a jump of 24%.
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