Amazon’s Profit Triples as Sales Show Resilience Leading Into Holidays

From The Wall Street Journal:

Amazon.com said profit tripled to nearly $10 billion from July to September as strong sales in its cloud-computing, advertising and retail units helped the company continue its rebound from postpandemic lows.

Chief Executive Andy Jassy said the company would reap tens of billions of dollars in revenue in the next several years as customers turn to generative AI opportunities available within its cloud-computing business, known as Amazon Web Services, or AWS. Business customers are likely to be less cautious with their spending, he said. 

“There’s so much more to provide,” Jassy said. “It’s going be a long time before we run out of services.” He noted that Amazon has seen a positive reaction to its AI platform, named Bedrock.

The company’s revenue increased by 13% to $143.1 billion for its third quarter, beating Wall Street expectations. Profit was $9.9 billion, more than triple the result from the same period last year. Amazon signaled net sales would be between $160 billion to $167 billion in its fourth quarter. Its shares rose by more than 5% in after-hours trading Thursday. 

Amazon has been trying to engineer a rebound in its core e-commerce business following a slowdown after pandemic-induced heights. The company has reined in costs across its North America unit, slashing roughly 27,000 corporate jobs and streamlining its operations following a cost-cutting review led by Jassy. It has also said it saved costs through an overhaul of its delivery operations meant to place packages closer to customers.

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While Amazon has tried to boost growth on its retail side, its cloud-computing business has seen less demand in the past year as corporate clients have looked to curtail their spending because of economic uncertainty. The unit has historically accounted for a large portion of Amazon’s profit. Sales in Amazon’s cloud business rose 12% to about $23 billion in the third quarter. Revenue in Amazon’s advertising segment, which has become a major business at the company, increased by 26% to about $12 billion, beating expectations.

The company has tried to promote its efforts in artificial intelligence, which it has largely done through AWS, as it competes with Microsoft and Google. Amazon in September said it had agreed to invest up to $4 billion in artificial-intelligence company Anthropic. AI startups spend much of their money on cloud-computing costs. AWS Chief Executive Adam Selipsky has said the unit’s strategy is to give its corporate customers who want to build AI features as much flexibility as possible.

Link to the rest at The Wall Street Journal (Sorry if you encounter a paywall)