Amazon’s sales skyrocket due to AI advancements and improved advertising.

Amazon Web Services revenue climbs to $25 billion as retail giant exceeds Wall Street’s forecast in earnings report.

Amazon has once again shown a stunning increase in earnings for the first quarter of 2024, capping off another successful quarter for the retail behemoth. The corporation attributed this expansion to improvements in artificial intelligence and higher advertising revenue.

During the first three months of this year, Amazon made a staggering $143.3 billion in revenue overall—a 13% rise over the same time in 2023 and more than Wall Street’s estimated $142.65 billion. The e-commerce behemoth saw profits soar to $15 billion, more than 200% higher than in 2023, and a more than threefold increase in net income to $10.4 billion from $3.17 billion during the same period.

Amazon’s CEO, Andy Jassy, emphasized in a statement issued in conjunction with the research that the company’s continued focus on artificial intelligence has rekindled the growth momentum of Amazon Web Services (AWS), its cloud computing subsidiary. AWS’s revenue increased by 17% in the past year to $25 billion, and the company accounted for 62% of the operational profit. In a conference call held after the research was released, Jassy stated that Amazon believes there is a lot of room for growth in the generative AI space.

The recent slowdown in the industry’s growth is followed by the return of AWS. Executives linked this decline to the fallout from the Covid-19 outbreak, which led many businesses to improve their cloud infrastructure in order to support remote work. They observed that this trend is currently leveling off and believe that the need for AI will increase demand for their cloud services.

“Our outlook for AWS remains very positive,” said Jassy. “Without accounting for generative AI, we are currently running at an annualized revenue run rate of $100 billion. We have a significant potential ahead of us.”

Conversely, after the firm expanded its advertising operations, such launching commercials on Prime Video earlier this year, advertising sales increased by 24% year over year to $11.8 billion.

Jassy emphasized on the Tuesday investor call that as Amazon steps up its efforts in cloud computing and artificial intelligence, it will be necessary to invest more in infrastructure in order to maintain these technologies. $14 billion was spent on capital expenditures (capex) during the quarter. According to Jassy, capex is expected to increase in the upcoming quarters of the fiscal year.

“We need to buy more power and hardware for new data centers because of the increasing demand for AWS,” he said, stressing that the company only makes capital investments “when there are clear indicators of potential monetization.” Following the news last week that Meta intended to increase capital investment in order to improve its AI capabilities, the company’s shares saw a significant decrease.

The earnings report comes after Amazon declared that it will invest $11 billion to build more data centers in Indiana, with the goal of creating at least 1,000 jobs. In order to keep fueling its AI solutions, the business also renewed its agreement with chip manufacturer Nvidia during the same quarter.

The analysis highlights the favorable response that investors have had to Amazon’s latest cost-cutting measures, which include the termination of more than 27,000 workers since the end of 2022. In the first part of 2024, Amazon laid off hundreds of more employees.

Shares surged by 5% in after-hours trading.