Amazon’s cloud division has been a big profit generator for years – but recently it hasn’t grown as quickly as its rival Microsoft. Now Amazon can convince with significantly better profitability.
Amazon significantly increased sales and profits in the last quarter thanks to its trading business and cloud division. Revenues grew by 13 percent year-on-year to 143.1 billion (135.5 billion euros). The bottom line is that profits jumped from $2.9 billion a year ago to $9.9 billion.
Cloud competitors Microsoft and Google
In the AWS cloud division, sales rose by twelve percent to $23.1 billion. That was roughly in line with analysts’ expectations, although some of them expected more given the boom in artificial intelligence. At the same time, AWS significantly increased its operating profit from $5.4 to $7 billion. That was significantly more than the market expected. Amazon competes with Microsoft and Google in the cloud market.
Amazon CEO Andy Jassy emphasized the progress in the AWS business in a conference call with analysts, even if some companies wanted to save money. Several new customer contracts have been concluded, which have been effective since this month. Jassy was convinced that the boom in software with artificial intelligence will also spur demand for cloud services.
An increase of $1.2 billion in the valuation of Amazon’s stake in electric car manufacturer Rivian also contributed to the profit. The share in the Tesla competitor, which also supplies thousands of electric delivery vans to Amazon, has repeatedly ruined the trading group’s quarterly figures with value adjustments in recent years. Amazon shares rose by a good five percent in after-hours trading on Thursday.
Hope for AI technologies
Jassy had significantly reduced costs and, in addition to the cloud, also expanded the advertising business. Amazon wants to become a strong player in so-called generative AI, he emphasized. This is an umbrella term for programs such as the chatbot ChatGPT, which can formulate sentences at the level of a human, as well as software that can sometimes create deceptively real images from text descriptions.
Amazon has recently started offering retailers the opportunity to have images of their products created in various environments using AI software. AI technologies could bring AWS tens of billions of dollars in additional revenue over the years, Jassy said.
Source: Stern
