Amazon.com posted sales growth and earnings that exceeded Wall Street projections on Thursday, as the business delivered products faster and cheaper to customers while the recent cloud-computing hurdles started to subside.
Amazon's stock rose 9% in after-hours trading, increasing its market capitalization to over $120 billion.
Faced with a slew of problems, the business has vowed to maintain its position as the world's largest cloud service provider and online shop.
Amazon has responded to AI leading contenders Google and Microsoft with its own competing services, attracting thousands of users and touting the range of technology on offer, which is akin to what powers ChatGPT, the human-like chatbot.
In the retail sector, Amazon has reconfigured its distribution network and constructed warehouses enabling same-day shipment closer to major metropolitan regions, reducing delivery costs and time.
On a conference call, Amazon's chief financial officer, Brian Olsavsky, stated that quicker speeds have resulted in Prime loyalty users shopping more frequently.
Amazon's sales increased 11% to 134.4 billion dollars in the second quarter, exceeding Refinitiv's expectation of 131.5 billion dollars.
Amazon's cloud computing segment has been essential. Amazon Web Services has seen its sales growth decelerate in recent months as businesses evaluated their cloud expenses. According to Olsavsky, such cost optimization persisted, but big firms were adopting the cloud again, giving the division a boost this spring and summer.
The segment outperformed expectations for second-quarter cloud revenues, raising them by 12% to 22.1 billion dollars. Its competitors had higher gains from smaller bases: Alphabet's June-quarter revenue from cloud services increased by 28%, while Microsoft's Azure increased by 26%.
According to Arun Sundaram, one of CFRA Research's equity analysts, the results demonstrated that Amazon was holding its own, even in so-called AI, which can generate fresh text, pictures, and other contents from historical data.
Jassy said to analysts that every division within Amazon is working on generative AI initiatives, which include customer-facing and cost-cutting efforts.
He stated that AWS's investment in the technology was a "significant" portion of Amazon's estimated 50 billion dollars in capital investment for 2023. Such investment is down from 59 billion dollars in 2022, offset by decreased fulfillment expenses.
Nonetheless, the benefits that Amazon's cloud can gain from fueling businesses' AI demand have yet to be fully realized. Consumers in e-commerce have acted with caution for months, deferring discretionary purchases and buying for value. CFO Olsavsky noted that household budgets remained tight, but that inflationary pressures were reducing.
Amazon is currently anticipating a boost from its greatest sales day in history, which occurred as part of the past month's promotional push for loyal customers known as Prime Day.
Monteiro stated that consumer sales both inside and outside of Amazon were expected to be solid in the second half of 2023.
The company anticipates net sales for the current quarter in the 138 billion to 143 billion dollar range. Refinitiv surveyed analysts predicted revenue of 138.25 billion dollars.
In longer term, Amazon hopes to turn its 35 billion dollars in annual gross business-to-business e-commerce transactions into 100 billion dollars, according to Jassy.
Amazon was looking for cost savings across the board, with layoffs affecting 27,000 people, or 9% of its approximately 300,000-person workforce. It recently unveiled more discounts at Amazon Fresh stores after months of searching for the best shopping approach.
The corporation recorded a 6.7 billion-dollar quarterly profit, about double what analysts projected.