Amazon.com, the e-commerce behemoth, delivered a standout performance in its first-quarter financial results, buoyed by robust growth in its key segments, particularly its AWS cloud computing division and advertising services. The company’s stock soared by 2.7% in after-hours trading on Tuesday, reaching $179.88, following the announcement of its stellar earnings.
This impressive performance by Amazon comes in the wake of similarly strong showings from tech giants Microsoft and Alphabet, both of which reported better-than-expected growth in their respective cloud computing businesses. As the largest player in the cloud computing market, Amazon’s AWS faced a pivotal test, which it decisively passed.
For the first quarter of the year, Amazon reported total sales of $143.3 billion, marking a notable 13% increase compared to the previous year. This figure surpassed the Street consensus of $142.6 billion, demonstrating Amazon’s robust revenue generation capabilities. Operating income also exceeded expectations, reaching $15.3 billion, significantly outperforming the company’s forecast range of $8 billion to $12 billion. Earnings per share stood at 98 cents, comfortably surpassing the Street’s estimate of 84 cents.
A standout performer in Amazon’s portfolio was its Amazon Web Services (AWS) division, which generated revenue of $25 billion for the quarter. This marked a robust 17% increase compared to the previous year and exceeded Street estimates by approximately two percentage points. The strong growth in AWS revenue, the best in four quarters, underscored Amazon’s continued dominance in the lucrative cloud computing market.
Revenue from Amazon’s online stores reached $54.7 billion, reflecting a solid 7% increase year-over-year. Similarly, revenue from third-party seller services experienced strong growth, reaching $34.6 billion, representing a 16% increase from the previous year. Revenue from subscriptions and advertising also showed healthy growth trajectories, with advertising revenue reaching $11.8 billion, marking a notable 24% increase from the previous year.
Looking ahead, Amazon anticipates sustained growth momentum, with plans to significantly increase capital spending in 2024. The company’s capital expenditures for the quarter totaled nearly $14 billion, aligning closely with spending by industry peers such as Microsoft. For the full year, the Street consensus calls for Amazon’s capital expenditures to reach $58 billion, underscoring the company’s commitment to investing in future growth opportunities.
For the upcoming June quarter, Amazon provided guidance of sales between $144 billion and $149 billion, slightly below the Street consensus of $150.2 billion. Operating income is expected to range from $10 billion to $14 billion, compared to Street estimates of $12.7 billion.
Amazon CEO Andy Jassy expressed confidence in the company’s performance, highlighting improvements in customer experience and financial results. He noted that the combination of increased investments in infrastructure modernization and the appeal of AWS’s AI capabilities is driving the reacceleration of AWS’s growth rate, now reaching a $100 billion annual revenue run rate.
In summary, Amazon’s robust first-quarter results underscore its resilience and continued momentum across key business segments. With a strong foundation in e-commerce, cloud computing, and advertising, Amazon is well-positioned to navigate the evolving digital landscape and capitalize on future growth opportunities.