Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Accelerating sales at Amazon’s cloud computing division helped the Big Tech giant beat analyst estimates for revenue and profit in an earnings report on Tuesday.
Amazon Web Services, a critical profit driver for the ecommerce giant, recorded a 17 per cent gain in sales to $25bn, ahead of forecasts for $24.5bn and faster than the 13 per cent rise recorded in the previous quarter. Overall net sales were $143.3bn, up 13 per cent from the year before and above forecasts for $142.5bn.
Chief executive Andy Jassy said demand for Amazon’s cloud computing services, including its generative artificial intelligence products, was boosting AWS’s growth, which he said was “now at a $100bn annual revenue run rate.”
The closely watched division’s margins also widened during the period to 38 per cent, compared with 30 per cent in the previous quarter.
Amazon has been vying with cloud computing rivals Microsoft and Google parent Alphabet for dominance in generative AI, and the three companies have outlined plans to spend billions of dollars on infrastructure such as data centres to support the fast-developing technology.
Microsoft said last week that its “near-term AI demand is a bit higher than our available capacity”. But Swami Sivasubramanian, vice-president for data and machine learning at AWS, told the Financial Times that Amazon was not facing the same constraints, adding that it was “rapidly scaling our capabilities”.
Amazon’s operating income for the first three months of the year was $15.3bn, beating forecasts for $11bn.
However, guidance for total second-quarter net sales came in below expectations, with Amazon predicting between $144bn-$149bn compared with analyst forecasts of $150bn.
Shares in Amazon, which have risen by about 17 per cent this year, rose nearly 3 per cent in after-hours trading.
Read the full article here
